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The consequences of US technology changes for productivity in advanced economies

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  • Elstner, Steffen
  • Rujin, Svetlana

Abstract

Since at least the mid-2000s, many advanced economies have experienced low productivity growth. This development is often related to declining productivity gains at the technology frontier, which is largely determined by the US. We challenge this explanation by studying the effects of US technology shocks on productivity levels in advanced economies. We find positive but small spillovers of US technology shocks. For many countries, the elasticity of their productivity with respect to a 1% increase in the US technology level is significantly lower than 1. Thus, the recent US productivity slowdown must have had a limited effect on productivity developments in advanced economies. Nevertheless, after 5 years, the degree of productivity spillovers varies across countries. Therefore, we analyze the role of institutions in shaping these results. Our findings suggest that isolated institutional characteristics are not able to explain the observed various spillover degrees.

Suggested Citation

  • Elstner, Steffen & Rujin, Svetlana, 2023. "The consequences of US technology changes for productivity in advanced economies," Macroeconomic Dynamics, Cambridge University Press, vol. 27(3), pages 718-742, April.
    • Handle: RePEc:cup:macdyn:v:27:y:2023:i:3:p:718-742_6
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    Cited by:

    1. Dieppe, Alistair & Francis, Neville & Kindberg-Hanlon, Gene, 2021. "Technology and demand drivers of productivity dynamics in developed and emerging market economies," Working Paper Series 2533, European Central Bank.
    2. Rujin, Svetlana, 2024. "Labor market institutions and technology-induced labor adjustment along the extensive and intensive margins," Journal of Macroeconomics, Elsevier, vol. 79(C).
    3. Rujin, Svetlana, 2019. "What are the effects of technology shocks on international labor markets?," Ruhr Economic Papers 806, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Dieppe, Alistair & Francis, Neville & Kindberg-Hanlon, Gene, 2021. "Technological and non-technological drivers of productivity dynamics in developed and emerging market economies," Journal of Economic Dynamics and Control, Elsevier, vol. 131(C).

    More about this item

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F00 - International Economics - - General - - - General

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