This paper investigates the sources of business cycle fluctuations using an identifying assumption that only supply shocks, such as technology and labor supply shocks, affect output in the long run. Real and monetary aggregate demand shocks affect output only in the short run. The study finds that aggregate demand shocks account for about 20-30% of output fluctuations at business cycle frequencies, technological shocks account for about 25% of cyclical fluctuations, and oil price shocks are important in explaining episodes in the 1970s and 1980s. Shocks that permanently affect labor input account for about half of output's variance at all frequencies. The paper uses an economic model to estimate the effects of different shocks on output, inflation, and interest rates. The results show that aggregate demand shocks are the main determinant of variability in prices, inflation, and interest rates. The study also finds that permanent labor supply shocks play a significant role in output fluctuations at all frequencies. The paper concludes that the findings are consistent with the idea that business cycle fluctuations are driven by a mixture of supply and demand shocks.This paper investigates the sources of business cycle fluctuations using an identifying assumption that only supply shocks, such as technology and labor supply shocks, affect output in the long run. Real and monetary aggregate demand shocks affect output only in the short run. The study finds that aggregate demand shocks account for about 20-30% of output fluctuations at business cycle frequencies, technological shocks account for about 25% of cyclical fluctuations, and oil price shocks are important in explaining episodes in the 1970s and 1980s. Shocks that permanently affect labor input account for about half of output's variance at all frequencies. The paper uses an economic model to estimate the effects of different shocks on output, inflation, and interest rates. The results show that aggregate demand shocks are the main determinant of variability in prices, inflation, and interest rates. The study also finds that permanent labor supply shocks play a significant role in output fluctuations at all frequencies. The paper concludes that the findings are consistent with the idea that business cycle fluctuations are driven by a mixture of supply and demand shocks.