Shock Hunting: The Relative Importance of Industry-Specific, Region-specific and Aggregate shocks in the OECD Countries
A common argument against monetary union is that it precludes stabilization of economies through monetary and exchange rate policy. We address this point by calculating the relative empirical importance of industry-specific, country-specific and aggregate disturbances using a comparable international data set comprising annual data from 1971 to 1993 for 19 OECD countries and 25 two-digit industries. The evidence seems to suggest that the country-specific shocks have declined over the last 20 years.
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