EconPapers    
Economics at your fingertips  
 

The Aggregate Effects of Sectoral Shocks in an Open Economy

Philippe Andrade, Martin Arazi (marazi@wustl.edu) and Viacheslav Sheremirov
Additional contact information
Martin Arazi: https://economics.wustl.edu/people/martin-arazi

No 23-13, Working Papers from Federal Reserve Bank of Boston

Abstract: We study the aggregate effects of sectoral productivity shocks in a multisectoral New Keynesian open-economy model that allows for asymmetric input-output linkages, both within and between countries, as well as for heterogeneity in sectoral Calvo-type price stickiness. Asymmetries in the international production network play a key role in the model’s ability to produce large domestic effects of foreign sectoral supply shocks and large differential effects of domestic shocks and global shocks. Larger trade openness and substitutability between domestic inputs and foreign inputs can also significantly amplify the effects of foreign and global sectoral shocks on domestic aggregates. In comparison, sectoral heterogeneity in price stickiness does not materially amplify the domestic responses to productivity shocks that originate abroad.

Keywords: international input-output linkages; sectoral shocks; Open-Economy New Keynesian Model (search for similar items in EconPapers)
JEL-codes: E12 E31 F41 F44 (search for similar items in EconPapers)
Pages: 52
Date: 2023-10-01
New Economics Papers: this item is included in nep-int, nep-net and nep-opm
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.bostonfed.org/publications/research-de ... s-in-an-open-economy Summary (text/html)
https://www.bostonfed.org/-/media/Documents/Workingpapers/PDF/2023/wp2313.pdf Full text (application/pdf)

Related works:
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:fip:fedbwp:97203

Ordering information: This working paper can be ordered from
boston.library@bos.frb.org

DOI: 10.29412/res.wp.2023.13

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Boston Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Spozio (catherine.spozio@bos.frb.org).

 
Page updated 2024-12-31
Handle: RePEc:fip:fedbwp:97203