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Demand- and Supply-Driven Externalities in OECD Countries: A Dynamic Panel Approach

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  • Salvador Barrios
  • Federico Trionfetti.

Abstract

This paper provides empirical evidence of the relevance of supply- and demand-driven externalities in determining sectoral employment growth for 18 industrial sectors on a set of OECD countries. The paper improves over the existing literature in two ways. First, we use dynamic panel estimation technique. This allows us to utilise lagged variables as natural instruments and to take account of possible dynamic externalities. Second, we look for evidence of externalities by relating activity in sector i to a weighted sums of downstream and upstream activity - thanks to input-output tables. This allows us to distinguish between demand- and supply-driven externalities.

Suggested Citation

  • Salvador Barrios & Federico Trionfetti., "undated". "Demand- and Supply-Driven Externalities in OECD Countries: A Dynamic Panel Approach," Working Papers 2002-10, FEDEA.
    • Handle: RePEc:fda:fdaddt:2002-10
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    References listed on IDEAS

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    2. Richard E. Baldwin & Philippe Martin & Gianmarco I. P. Ottaviano, 2021. "Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 2, pages 25-57, World Scientific Publishing Co. Pte. Ltd..
    3. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
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