Asymmetric Effects Of Aggregate Demand Shocks Across U.S. Industries: Evidence And Implications

Both time-series and cross-sectional regressions are estimated for 28 private two-digit standard industrial classification (S.I.C.) industries in the United States. Positive and negative aggregate demand shocks have varying effects on each of real output growth, nominal wage inflation, and price inflation for many industries. Asymmetry appears to be the result of movements in demand along a kinked-slope industrial supply curve. Supply-side asymmetry appears to be induced by trend price inflation. In addition, the variability of industrial demand increases asymmetry in the effects of aggregate demand shocks on industrial variables.