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Article
Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances? A Vector Autoregression Approach
Applied Economics Letters
  • Tony Caporale, University of Dayton
  • Khosrow Doroodian, Ohio University - Main Campus
  • M.R.M. Abeyratne, Ohio University - Main Campus
Document Type
Article
Publication Date
1-1-1996
Abstract
Using a multivariate vector autoregression (VAR) model, this paper investigates if sectoral shifts, inflation uncertainty, or demand shocks are the primary cause of unemployment fluctuations in the postwar U.S. economy. A sectoral shifts variable (cross-section volatility), an ARCH measure of inflation uncertainty, and three demand shocks variables (monetary base growth rate, interest rates and inflation rates) are incorporated in a VAR model. Our major findings are: cross-section volatility Granger causes unemployment; the sectoral shifts variable and inflation uncertainty explain a small amount, while demand shocks variables explain a substantial amount of the variation in unemployment.
Inclusive pages
127-130
ISBN/ISSN
1350-5851
Publisher
Taylor & Francis
Peer Reviewed
Yes
Citation Information
Tony Caporale, Khosrow Doroodian and M.R.M. Abeyratne. "Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances? A Vector Autoregression Approach" Applied Economics Letters Vol. 3 Iss. 2 (1996)
Available at: http://works.bepress.com/tony_caporale/7/