Technology shocks around the world

Martial Dupaigne and Patrick Fève

Review of Economic Dynamics, 2009, vol. 12, issue 4, 592-607

Abstract: This article investigates the effects of a permanent technology shock on labor input in the major seven developed countries. The recent empirical literature which uses Structural Vector Autoregressions (SVAR) with long-run restrictions has argued that technology shocks lead to a persistent and significant decline in employment in most of the G7 countries. We claim that the international transmission of shocks prevents the use of existing SVAR models, but also suggests alternative specifications to properly uncover their effects. We show in a quantitative two-country model that a measure of labor productivity aggregated across countries is more immune to persistent, if not permanent, shocks and allows to accurately identify the responses of the labor input to a technology shock. Using labor productivity at the G7 aggregate level, we find that the response of employment changes critically in most of the major seven developed countries. (Copyright: Elsevier)

Keywords: Technology shocks; Labor input; Vector autoregressions; Multi-country economy (search for similar items in EconPapers)
JEL-codes: C32 E32 F41 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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DOI: 10.1016/j.red.2008.12.002

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