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

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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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  • Antonio Acconcia & Saverio Simonelli, 2005. "Revisiting the one type permanent shocks hypothesis: Aggregate fluctuations in a multi-sector economy," CSEF Working Papers 137, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Sep 2006.
  • Handle: RePEc:sef:csefwp:137
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    More about this item

    Keywords

    Technology shock; Dynamic Factor Model; Long-Run Restrictions; Sectors;

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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