Factor Demand Linkages, Technology Shocks and the Business Cycle

Sean Holly and Ivan Petrella

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper argues that factor demand linkages are crucial in the transmission of both sectoral and aggregate shocks. We show this using a panel of highly disaggregated manufacturing sectors together with sectoral structural VARs. When sectoral interactions are explicitly accounted for, a contemporaneous technology shock to all manufacturing sectors implies a positive response in both output and hours at the aggregate level. Otherwise, there is a negative correlation as in much of the existing literature. Furthermore, we find that technology shocks are important drivers of business cycles.

Keywords: Multisectors; Technology shocks; Business cycles; Long-run restrictions; Cross Sectional Dependence (search for similar items in EconPapers)
JEL-codes: C31 C51 E20 E32 (search for similar items in EconPapers)
Date: 2010-01-22
New Economics Papers: this item is included in nep-bec and nep-mac
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Citations: View citations in EconPapers (2)

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https://www.econ.cam.ac.uk/sites/default/files/pub ... pe-pdfs/cwpe1001.pdf

Related works:
Journal Article: Factor Demand Linkages, Technology Shocks, and the Business Cycle (2012)
Working Paper: Factor demand linkages, technology shocks and the business cycle (2010)
Working Paper: Factor Demand Linkages, Technology Shocks and the Business Cycle (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1001

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