IMPACT OF AGGREGATE DEMAND AND AGGREGATE SUPPLY SHOCKS ON CHINA'S DYNAMIC RELATIONSHIP BETWEEN UNEMPLOYMENT AND OUTPUT

In the short run,aggregate supply shock is the main source of output fluctuation and the aggregate demand shock is the main source of unemployment fluctuation.The aggregate supply and demand shocks jointly destroy the reverse relationship between unemployment and output and the aggregate demand shock does more.In the long run,the aggregate demand shock has no impact on output and the aggregate supply shock has significant impact on output;the aggregate demand shock has no impact on unemployment and the aggregate supply shock has adverse impact on unemployment.This is to say,the accumulative positive supply shock contributes to the rise of the unemployment rate.