Technology diffusion and international business cycles

Uluc Aysun

No 2023-02, Working Papers from University of Central Florida, Department of Economics

Abstract: This paper shows that the cross-country diffusion of innovations forms a critical channel through which macroeconomic shocks are transmitted across economies. This inference is obtained from a two country, medium scale DSGE model that includes an endogenous growth mechanism. R&D activity and innovation are the main components of this mechanism and they are introduced through a labor-augmenting technology. The model features international diffusion of technologies as the innovations by a firm are not only adopted by other firms within a country but also by those in the other country. Estimating the model with US and Euro Area data, I observe that foreign shocks contribute a high share to the macroeconomic volatility in each economy. By contrast, foreign shocks make a negligible contribution when the model is estimated after shutting down technology diffusion. The results, more generally, show that it is not technology shocks, nor any other shock, but the transmission of shocks through the diffusion of new technologies that is the key driver of international business cycles.

Keywords: Research and development; international business cycles; endogenous growth; DSGE; Bayesian estimation. (search for similar items in EconPapers)
JEL-codes: F42 F44 O30 O33 (search for similar items in EconPapers)
Pages: 57 Pages
Date: 2023-04
New Economics Papers: this item is included in nep-dge, nep-opm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://economics.itweb.ucf.edu/workingpapers/2023-02UA.pdf Full text (application/pdf)

Related works:
Journal Article: Technology diffusion and international business cycles (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cfl:wpaper:2023-02ua

Access Statistics for this paper

More papers in Working Papers from University of Central Florida, Department of Economics
Bibliographic data for series maintained by Uluc Aysun ().