Data and Code for: Supply and Demand in Disaggregated Keynesian Economies with an Application to the Covid-19 Crisis

Principal Investigator(s):  View help for Principal Investigator(s) David Baqaee, UCLA; Emmanuel Farhi

Version:  View help for Version V1

Name File Type Size Last Modified
.Rhistory text/plain 25.2 KB 12/21/2021 09:53:AM
2017-industry-code-list-with-crosswalk.xlsx application/vnd.openxmlformats-officedocument.spreadsheetml.sheet 70.3 KB 12/21/2021 09:53:AM
BLS_labor_shock_202108.xls application/vnd.ms-excel 74.5 KB 12/21/2021 09:53:AM
Employment_TableB1.xlsx application/vnd.openxmlformats-officedocument.spreadsheetml.sheet 297.4 KB 12/21/2021 09:53:AM
Employment_TableB2.xlsx application/vnd.openxmlformats-officedocument.spreadsheetml.sheet 42.9 KB 12/21/2021 09:53:AM
Expenditure_202107.xls application/vnd.ms-excel 185.5 KB 12/21/2021 09:53:AM
IO_data_2018.mat application/x-matlab-data 336.4 KB 12/21/2021 09:53:AM
IO_to_NAICS(1).xlsx application/vnd.openxmlformats-officedocument.spreadsheetml.sheet 41.8 KB 12/21/2021 09:53:AM
IO_to_NAICS.dta application/x-stata-dta 34.9 KB 12/21/2021 09:53:AM
IO_to_NAICS_Census.dta application/x-stata-dta 37 KB 12/21/2021 09:53:AM
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Project Description

Summary:  View help for Summary We study supply and demand shocks in a disaggregated model with multiple sectors, multiple factors, input-output linkages, downward nominal wage rigidities, credit-constraints, and a zero lower bound.  We use the model to understand how the Covid-19 crisis, an omnibus supply and demand shock, affects output, unemployment, and inflation, and leads to the coexistence of tight and slack labor markets. We show that negative sectoral supply shocks are stagflationary, whereas negative demand shocks are deflationary, even though both can cause Keynesian unemployment. Furthermore,complementarities in production amplify Keynesian spillovers from supply shocks but mitigate them for demand shocks. This means that complementarities reduce the effectiveness of aggregate demand stimulus. In a stylized quantitative model of the US, we find supply and demand shocks each explain about half the reduction in real GDP from February to May, 2020. Although there was as much as 6% Keynesian unemployment, this was concentrated incertain markets. Hence, aggregate demand stimulus is one quarter as effective as in a typical recession where all labor markets are slack.


Scope of Project

Subject Terms:  View help for Subject Terms Covid-19; unemployment; business cycles
JEL Classification:  View help for JEL Classification
      E10 General Aggregative Models: General
      E30 Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
Geographic Coverage:  View help for Geographic Coverage USA
Data Type(s):  View help for Data Type(s) aggregate data; census/enumeration data; program source code


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Published Versions

V1 [2022-04-19]

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