Are apparent productive spillovers a figment of specification error?

Susanto Basu () and John Fernald ()

No 463, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Using data on gross output for two-digit manufacturing industries, we find that an increase in the output of one manufacturing sector has little or no significant effect on the productivity of other sectors. Using value-added data, however, we confirm the results of previous studies which find that output spillovers instead appear large. We provide an explanation for these differences, showing why, with imperfect competition, the use of value-added data leads to a spurious finding of large apparent external effects.

Keywords: Productivity (search for similar items in EconPapers)
Date: 1994
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Related works:
Working Paper: Are Apparent Productive Spillovers a Figment of Specification Error? (1999)
Working Paper: Are Apparent Productive Spillovers a Figment of Specification Error (1993)
Journal Article: Are apparent productive spillovers a figment of specification error? (1995)
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