Demand-driven shocks dominate U.S. business cycles, shaping economic growth.
The article examines the causes of U.S. business cycles by analyzing different types of economic shocks in various sectors. By using a special model, the researchers found that demand-side shocks, like changes in consumer spending, have a bigger impact on GDP growth during business cycles than supply-side shocks, such as technological advancements. They also discovered that financial shocks in the corporate sector play a significant role in affecting the economy through demand channels.