The third and final shock we consider is a supply side shock
. It is given by a positive technological shock which, for exogenous reasons, affects the natural level of output, such that [y.sub.n] = 2.
The performance of macroeconomic variables is affected by oil prices which have six channels such as supply side shock
effect, wealth transfer effect, inflation effect, real balance effect, sector adjustment effect, and unexpected effect [Brown and Yucel (2002); Jones, et al.
to the economic slowdown in Russia; (2) the supply side shock
slowdown in Russia; (2) the supply side shock
stemming from the natural gas and energy tariff increase in July 2013; and (3) large
And you've guessed it; the main supply side shock
' traditional producers face, comes directly from American liquids supply growth creating downwards pressures.
"We think that the markets are just getting a little concerned over the supply side shock
that could come if the matter escalated in some form or extent," said David Lennox, an analyst at Fat Prophets research house.
Supply side shock
makes the prices of food items and oil volatile and since this shock prolonged, demand management and even monetary policies could not be successful in bringing the economy out of inflationary trap.
He reiterated that higher oil prices could dampen growth while demand for oil continued to grow, especially from China and the limited scope for extra supplies meant there was a risk of supply side shock
From this equation it is clear that the demand side variable, [r.sub.t] is contemporaneously correlated with the supply side shock
After bottoming out at 2.7% yoy in April 2012, inflation started accelerating in the 2H on a new supply side shock
. The inflation rally was predominantly driven by supply-side factors related primarily to domestic unprocessed and processed food prices.
The BSP also hiked the policy rate twice to curb inflationary expectations that can build on the supply side shocks
: 'We're being very measured about this, so the country's strong growth prospect is still protected.'