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Short and Long Run Externalities

  • Eric J. Bartelsman
  • Ricardo J. Caballero
  • Richard K. Lyons

In this paper we build upon previous work on external economies in manufacturing [Caballero and Lyons (1989, 1990)] by providing new evidence helpful for discriminating between different types of externalities. We investigate four-digit level input-output relationships and find that, over shorter horizons, the linkage between an industry and its customers is the most important factor in the transmission of externalities. This suggests that transactions externalities accruing primarily to the seller, and/or activity-driven demand externalities are significant for explaining the short-run behavior of measured total factor productivity. Over longer horizons. on the other hand, it is the activity level of suppliers that is more important. This suggests that external effects are also operating through intermediate goods linkages.

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File URL: http://www.nber.org/papers/w3810.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3810.

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Date of creation: Aug 1991
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Publication status: published as "Customer and Supplier Driven Externalities" American Economic Review, Sept 1994, vol 84, No 4, pp 1075-1084
Handle: RePEc:nbr:nberwo:3810
Note: ITI EFG IFM
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  1. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
  2. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  3. Jess Benhabib & Boyan Jovanovic, 1989. "Externalities and Growth Accounting," NBER Working Papers 3190, National Bureau of Economic Research, Inc.
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  7. Jeffrey I. Bernstein & M. Ishaq Nadiri, 1988. "Interindustry R&D Spillovers, Rates Of Return, and Production In High-Tech Industries," NBER Working Papers 2554, National Bureau of Economic Research, Inc.
  8. Bernstein, Jeffrey I. & Nadiri, M. Ishaq, 1988. "Interindustry R&D, Rates of Return and Production in High-Tech Industries," Working Papers 88-04, C.V. Starr Center for Applied Economics, New York University.
  9. Zvi Griliches, 1998. "Interindustry Technology Flows and Productivity Growth: A Reexamination," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 241-250 National Bureau of Economic Research, Inc.
  10. Ethier, Wilfred, 1979. "Internationally decreasing costs and world trade," Journal of International Economics, Elsevier, vol. 9(1), pages 1-24, February.
  11. Adam B. Jaffe, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits and Market Value," NBER Working Papers 1815, National Bureau of Economic Research, Inc.
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  13. Matthew D. Shapiro, 1989. "Assessing the Federal Reserve's Measures of Capacity and Utilization," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 181-242.
  14. Eric J. Bartelsman, 1990. "Federally sponsored R&D and productivity growth," Finance and Economics Discussion Series 121, Board of Governors of the Federal Reserve System (U.S.).
  15. Caballero, Ricardo J. & Lyons, Richard K., 1990. "Internal versus external economies in European industry," European Economic Review, Elsevier, vol. 34(4), pages 805-826, June.
  16. Christopher A. Sims, 1977. "Remarks on Real Value Added," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 6, number 1, pages 127-131 National Bureau of Economic Research, Inc.
  17. Robert E. Hall, 1989. "Temporal Agglomeration," NBER Working Papers 3143, National Bureau of Economic Research, Inc.
  18. Ricardo J. Caballero & Richard K. Lyons, 1989. "The Role of External Economies in U.S. Manufacturing," NBER Working Papers 3033, National Bureau of Economic Research, Inc.
  19. Joe P. Mattey, 1990. "Prices by industry-based stage-of-process," Working Paper Series / Economic Activity Section 111, Board of Governors of the Federal Reserve System (U.S.).
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