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Revisiting the one type permanent shocks hypothesis: Aggregate fluctuations in a multi-sector economy

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Author Info
Antonio Acconcia () (Università di Napoli Federico II and CSEF)
Saverio Simonelli () (Università di Napoli Federico II and ECARES)

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Abstract

This paper relies on sectoral-level data to interpret aggregate fluctuations of labor productivity and employment in US as due to exogenous disturbances. A shock determining permanent effect on the real investment good price may reasonably be interpreted as an investment-specific technology shock, since it mainly produces long-run effect on labor productivity in the durable goods producing sector. A transitory shock on the real investment price may instead be interpreted as a sectorneutral disturbance since it homogeneously affects the labor productivity across sectors. Finally, sectoral evidence suggests that the near-zero correlation between aggregate productivity and employment growth rates may be explained as the overall outcome of positive and negative correlations within, respectively, the durable and nondurable goods producing sectors.

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Publisher Info
Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 137.

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Date of creation: 01 Apr 2005
Date of revision: 01 Sep 2006
Publication status: Published in Journal of Economic Dynamics and Control, 2008, Vol.32, pages 3009-3031
Handle: RePEc:sef:csefwp:137

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Related research
Keywords: Technology shock; Dynamic Factor Model; Long-Run Restrictions; Sectors;

Find related papers by JEL classification:
C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - General
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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References listed on IDEAS
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    Other versions:
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    Other versions:
  6. Stephanie Schmitt-Grohe, 2000. "Endogenous Business Cycles and the Dynamics of Output, Hours, and Consumption," American Economic Review, American Economic Association, vol. 90(5), pages 1136-1159, December. [Downloadable!] (restricted)
    Other versions:
  7. Jordi Gali, 1999. "Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?," American Economic Review, American Economic Association, vol. 89(1), pages 249-271, March. [Downloadable!] (restricted)
    Other versions:
  8. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-62, June. [Downloadable!] (restricted)
    Other versions:
  9. Lawrence J. Christiano & Martin Eichenbaum & Robert Vigfusson, 2003. "What Happens After a Technology Shock?," NBER Working Papers 9819, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. Blanchard, Olivier Jean, 1989. "A Traditional Interpretation of Macroeconomic Fluctuations," American Economic Review, American Economic Association, vol. 79(5), pages 1146-64, December. [Downloadable!] (restricted)
  11. Mario Forni & Marc Hallin & Marco Lippi & Lucrezia Reichlin, 2000. "The Generalized Dynamic-Factor Model: Identification And Estimation," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 540-554, November. [Downloadable!] (restricted)
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  12. Forni, Mario & Lippi, Marco & Reichlin, Lucrezia, 2003. "Opening the Black Box: Structural Factor Models versus Structural VARs," CEPR Discussion Papers 4133, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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    Other versions:
  16. Neville Francis & Valerie A. Ramey, 2002. "Is the Technology-Driven Real Business Cycle Hypothesis Dead?," NBER Working Papers 8726, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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