This paper uses the short-run restrictions implied by a simple aggregate demandaggregate supply model as an aid in identifying structural shocks. Combined with the Blanchard-Quah restriction, it allows estimation of the slope of the aggregate supply curve, the variances of structural demand and supply shocks, and the extent to which structural demand and supply shocks are correlated. This paper...

Demand models produce biased results when applied to data aggregated across stores with heterogeneous promotional activity. We show how to modify extant aggregate demand frameworks to avoid this problem. First a consumer-level model is developed, which is then integrated over the heterogeneous stores to arrive at aggregate demand. Our approach is highly practical since it requires only standard...

In this paper we examine the stochastic properties that long term aggregate traffic demand exhibits. Based on the results of the time series analysis, we examine how fractionally integrated processes affect real option valuation in road projects. We conclude that the long memory property we find in long term aggregate traffic demand using Swedish data, implying that a shock in demand has persis...

D choice models of aggregate demand, such as the random coefficients logit, can handle large differentiated products categories parsimoniously while still providing flexible substitution patterns. However, the discrete choice assumption may not be appropriate for many categories in which we expect consumers may purchase more than one unit of the selected item. We derive the aggregate demand sys...

A popular model in the literature postulates an interest rate rule, a NAIRU price equation, and an aggregate demand equation in which aggregate demand depends on the real interest rate. In this model a positive inflation shock with the nominal interest rate held constant is explosive because it increases aggregate demand (because the real interest rate is lower), which increases inflation throu...

The increasing penetration of renewable sources in electricity grids has motivated interest in controlling loads to compensate for variability of these generation sources. Air conditioners (ACs) are one type of loads that can be effectively controlled by broadcasting temperature setpoint offsets and using measurements of aggregate power demand for feedback, as shown in recent works. While such ...

A model of macroeconomic complementarity is used to assess causes of comovement in investment spending across nine sectors of the U.S. economy. It is hypothesized that the irreversibility and uncertainty of investment spending imply a greater role for investment linkages and aggregate factors in investment fluctuations compared with estimates for employment and output. For the average sector, p...

In this paper we assess the relationship between the aggregate income elasticity of aggregate demand and individual income elasticities of demand. We show that the aggregate elasticity is equal to the mean of individual elasticities plus a covariance term. Consequently, the sign of this covariance term determines whether the aggregate elasticity overestimates or underestimates the mean of indiv...