Download now Free registration required
This paper argues that factor demand linkages are crucial in the transmission of both sectoral and aggregate shocks. The authors show this using a panel of highly disaggregated manufacturing sectors together with sectoral structural VARs. When sectoral interactions are explicitly accounted for, a contemporaneous technology shock to all manufacturing sectors implies a positive response in both output and hours at the aggregate level. Otherwise, there is a negative correlation as in much of the existing literature. Furthermore, they find that technology shocks are important drivers of business cycles.
- Format: PDF
- Size: 470.43 KB