This paper assumes tha the U.S. economy is driven by six structural shocks: oil, non-oil aggregate supply, fiscal, monetary, aggregate demand, and exchange rate innovations. The structural VAR approach is used to examine the importance of thee shocks for the macroeconomic fluctuations of the 1973–1989 period. The results show that supply-side shocks are important for output fluctuations both in ... [Show full abstract] the short-run and long-run and that, as theory predicts, they affect output permanently. Non-oil supply innovations appear to be more significant than oil shocks. On the other hand, demand-side (primarily monetary) shocks have only transitory effects on output. All innovations affect inflation in the short-run, but only money growth was found to exert permanent effects on inflation. Finally, faster money growth leads to depreciation of the dollar but apparently, and contrary to conventional wisdom, so do higher budget deficits.