The two private sector shocks that are most likely to contaminate the fiscal shocks
are strikes and productivity shocks. Given a minimum of intertemporal substitution,
phenomena like strikes are unlikely to affect appreciably the provision of inputs in sectors
that sell to the government over an entire quarter. Unless, of course, they are very long;
but prolonged, industry - wide strikes are rare in the sample of countries of this study.
In addition, they are mostly seasonally adjusted away, as was the case with perhaps the
most celebrated strike in the sample, that from April to October of 1981 in the UK.
Still, a strike or a productivity shock can cause the delivery of a big item, like an
aircraft or a carrier, to move from one quarter to another. While it is not clear how
important this phenomenon is in the data, we have seen that the delivery method is in
any case relatively rare. And a productivity shock seems unlikely to grossly distort the
estimation of a fiscal shock when the progress payment method or the “work-put-in-place
approximation” are used, as in most cases in this sample.