Supply shock


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Supply shock

An event that influences production capacity and costs in an economy.

Supply Shock

Any sudden event that dramatically but (usually) temporarily increases or decreases supply for one or more goods or services. The event may result from government intervention, such as a change in money supply, or may be a random occurrence in the market. For example, a sudden discovery of oil in a field previously thought mainly dry will increase the supply of oil, which will lower the price, assuming demand remains constant. See also: Demand shock.
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(8.) If one assumes a stable money demand function, [[epsilon].sup.m.sub.t] can be interpreted as a money supply shock. However, if money demand is not stable, [[epsilon].sup.m.sub.t] will capture money supply shocks net of money demand shocks.
The differences between the two measures of the output gap in the nineties are most likely due to the supply shock variables added and the co-movement between the unemployment and the output gap in the Apel-Jansson approach.
Our findings are that the second quarter 1995 slowdown (1) should have been partly expected, but (2) some additional bumpiness suggests that a supply shock hit the economy in the first quarter of 1995.
"Given the contained underlining inflationary pressures and the transitory nature of the supply shock related to select fresh vegetables, the MPC determined to keep key policy rates unchanged," the committee stated.
Treasury Action: yields pulled back from highs in the wake of the declines in ISM manufacturing and construction spending, which capped yields after their earlier surge with those of JGBs, firmer ADP and the supply shock. The 2-year yield cooled off from 2.685% highs; the 5-year stalled out at 2.887%, easing to 2.88%; the benchmark 10-year hit 3.015% before easing to 3.0%; and the 30-year hit 3.147% then eased to 3.12%.
Equation (12) shows that the exchange rate varies positively with a negative (price-expectations- induced) aggregate supply shock when the weighted sum of the value of the foreign economy's aggregate price elasticities, [absolute value of [c.sub.2] + [e.sub.1]/[P'.sub.f][[eta]'.sub.f]], is greater than the comparable weighted sum for the home economy, [absolute value of [a.sub.2] + [b.sub.1]/P'[[eta]'].
Panel A shows a positive supply shock causes a sustained decline in real oil prices.
Oil supply shock trade is not expected to last that long.
Speaking at the Inverness Chamber of Commerce on Thursday morning, Ramsden said a disorderly no-deal Brexit would "certainly be a major negative supply shock" - the biggest since the 1970s, he added.
Williams adding that hew views the "tariffs as a negative supply shock" and that this "has various effects on the economy.
Oxford Economics said that while there is a possibility that the impending supply crunch would be alleviated by higher production elsewhere, a single supply shock could easily send oil prices to shoot up to $100 per barrel.
We know little about the size and speed of adjustments of wages and skills to a skilled labour supply shock, and its spillovers and effects on the local economy.