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. The authors 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 nineteen OECD countries and twenty-five two-digit industries. The evidence seems to suggest that the country-specific shocks have declined over the last twenty years. Copyright 1999 by Blackwell Publishers Ltd and The Victoria University of Manchester