Factor demand linkages, technology shocks and the business cycle

Sean Holly and Ivan Petrella

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: This paper argues that factor demand linkages can be important for 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 cycle.

Date: 2010-10
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https://lirias.kuleuven.be/bitstream/123456789/280806/1/DPS1026.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:ete:ceswps:ces10.26

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