Hi, I think the word "flow" in the title of historical decompositions & counterfactuals plot is a little bit misleading. What is meant by that? I assume the word "flow" appears in the SVAR book (Kilian & Lütkepohl 2017) is because the authors use the oil model of Kilian & Lee (2014) in their illustration, who disentangle the shocks to the amount of oil being consumed ("flow demand shock") from those to the demand for "above-ground" crude oil inventories ("speculative demand shock"). See also Kilian & Murphy JAE (2014).
bests
shu
swang1112
commented
4 years ago
Hi, I think the word "flow" in the title of historical decompositions & counterfactuals plot is a little bit misleading. What is meant by that? I assume the word "flow" appears in the SVAR book (Kilian & Lütkepohl 2017) is because the authors use the oil model of Kilian & Lee (2014) in their illustration, who disentangle the shocks to the amount of oil being consumed ("flow demand shock") from those to the demand for "above-ground" crude oil inventories ("speculative demand shock"). See also Kilian & Murphy JAE (2014). bests shu