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Published: American Economic Review, September 1989, vol. 79, no. 4, pp. 655-673


September 1989
The Dynamic Effects of Aggregate and Demand Supply Disturbances

O. J. Blanchard and D. Quah

We interpret fluctuations in GNP and unemployment as due to two types of disturbances: disturbances that have a permanent on output and disturbances that do not. We interpret the first as supply disturbances, the second as demand disturbances. Demand disturbances have a hump-shaped mirror-image effect on output and unemployment. The effect of supply disturbances on output increases steadily over time, peaking after two years and reaching a plateau after five years.



[Code only in zip archive] See also tsrf code for Measuring core inflation.
[Other academic papers] by Danny Quah

Danny Quah, dq @ econ.lse.ac.uk