Trade among sectors drives economy, no need for implausible aggregate shocks.
The article presents a model that shows how fluctuations in different sectors of the economy can cause overall economic ups and downs. By focusing on how sectors trade with each other, the model suggests that these interactions can lead to synchronized shocks that affect the economy as a whole. This means that the model can explain economic fluctuations without relying on broad, overall shocks. The researchers tested the model using data from the US economy and found that it closely matched real-world economic patterns, showing that sectoral shocks can play a significant role in shaping the economy.