Sectoral Price Changes and Output Growth : Supply and Demand in General Equilibrium

  title={Sectoral Price Changes and Output Growth : Supply and Demand in General Equilibrium},
  author={Nathan S. Balke and Hiranya K. Nath},
Abstract: Price changes and output growth, both at the aggregate and the sectoral level, appear to be negatively correlated. At a basic level, this suggests that sectoral “supply” shocks are more prevalent than sectoral “demand” shocks. However, it is not clear what these sectoral price-output correlations mean once one thinks in terms of general equilibrium. To help us understand the implication of these price-output correlations, this paper examines a multi-sector dynamic general equilibrium… CONTINUE READING
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