COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

OWLES FOUNDATION DISCUSSION PAPER NO. 821

"Supply Shocks in Macroeconomics"

Matthew D. Shapiro

February 1987

Supply shocks played an important role in macroeconomic fluctuations during the 1970's. Supply shocks are also increasingly important in Keynesian and neo-classical models of the business cycle. This paper is a short survey of these theoretical models. It also discusses the history of supply shocks in recent business cycles.

JEL Classification: 023, 131

Keywords: Supply shocks, macroeconomic fluctuations, business cycles