American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Macroeconomic Frameworks: Reconciling Evidence and Model Predictions from Demand Shocks
American Economic Journal: Macroeconomics
vol. 16,
no. 3, July 2024
(pp. 190–229)
Abstract
How do demand shocks affect the economy? We exploit detailed data on US defense spending to examine a large set of outcome variables in response to well-identified local demand shocks, jointly examining new outcomes (e.g., firm entry and housing rents) and other key macroeconomic outcomes and elasticities that previously have been estimated separately or in settings with weaker identification. We find that government spending crowds in employment, firm entry, private consumption, and labor productivity while also increasing local housing rents. To reconcile the evidence with theory, we study a model of economic slack.Citation
Auerbach, Alan J., Yuriy Gorodnichenko, and Daniel Murphy. 2024. "Macroeconomic Frameworks: Reconciling Evidence and Model Predictions from Demand Shocks." American Economic Journal: Macroeconomics, 16 (3): 190–229. DOI: 10.1257/mac.20210033Additional Materials
JEL Classification
- E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
- E21 Macroeconomics: Consumption; Saving; Wealth
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E25 Aggregate Factor Income Distribution
- H56 National Security and War
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- R31 Housing Supply and Markets
There are no comments for this article.
Login to Comment