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Does Asymmetry of International Shocks Matter for the U.S. Business Cycle?
Author(s) -
Gamber Edward N.,
Hung Juann H.
Publication year - 2004
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbh087
Subject(s) - stylized fact , business cycle , economics , asymmetry , shock (circulatory) , structural vector autoregression , econometrics , vector autoregression , inflation (cosmology) , monetary economics , macroeconomics , physics , monetary policy , medicine , quantum mechanics , theoretical physics
This article proposes and investigates the asymmetry hypothesis, which predicts that an international asymmetric shock tends to have a stronger and longer effect on the U.S. business cycle than a symmetric shock. The hypothesis finds empirical support in the impulse responses of U.S. output and inflation to symmetric and asymmetric shocks; those responses are estimated in a four‐variable structural vector autoregression. The hypothesis also finds support in stylized facts: The longest U.S. expansions have tended to occur when the rest of the world was growing below potential.