In this paper we extend the standard Blanchard-Quah decomposition to enable fluctuations in aggregate demand to have a long-run impact on the productive capacity of the economy through hysteresis effects. These demand shocks are found to be quantitatively important in the US, in particular if...

In this paper, we identify demand shocks that can have a permanent effect on output through hysteresis effects. We call these shocks permanent demand shocks. They are found to be quantitatively important in the United States, in particular when the sample includes the Great Recession. Recessions...

We propose a new VAR identification scheme that enables us to disentangle labour supply shocks from wage bargaining shocks. identification is achieved by imposing robust signrestrictions that are derived from a New Keynesian model with endogenous labor force participation. According to our...

We propose a new VAR identification scheme that enables us to disentangle labor supply shocks from wage bargaining shocks. Identification is achieved by imposing robust signrestrictions that are derived from a New Keynesian model with endogenous labor force participation. According to our...

In this paper we extend the standard Blanchard-Quah decomposition to enable fluctuations in aggregate demand to have a long-run impact on the productive capacity of the economy through hysteresis effects. These demand shocks are found to be quantitatively important in the US, in particular if...

We propose a new VAR identfication scheme that enables us to disentangle labor supply shocks from wage bargaining shocks. Identification is achieved by imposing robust signrestrictions that are derived from a New Keynesian model with endogenous labor force participation. According to our...

In this paper, we identify demand shocks that can have a permanent effect on output through hysteresis effects. We call these shocks permanent demand shocks. They are found to be quantitatively important in the United States, in particular when the sample includes the Great Recession. Recessions...