Journal Article
Explaining unemployment: sectoral vs aggregate shocks
Abstract: We include a stock market-based measure of sectoral shocks in a small VAR to examine the role played by these shocks in explaining the behavior of the unemployment rate. Sectoral shocks explain a significant proportion of the variation in the unemployment rate - especially the long-duration unemployment rate - even though other kinds of shocks (such as shocks to monetary policy, defense expenditures, and oil prices) are allowed to affect the unemployment rate. A historical decomposition reveals that recession, and they explain only a modest part of the rise in unemployment over the 1990 recession.
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Bibliographic Information
Provider: Federal Reserve Bank of San Francisco
Part of Series: Economic Review
Publication Date: 1997
Pages: 3-15
Order Number: 1