Technology and non-technology shocks in a two-sector economy

Francesco Busato (), Alessandro Girardi and Amedeo Argentiero

No 96, ISAE Working Papers from ISTAT - Italian National Institute of Statistics - (Rome, ITALY)

Abstract: This paper presents an empirically testable two-sector dynamic general equilibrium model for the United States economy that admits technology and non-technology shocks. Long-run identification restrictions further distinguish the impact of each shocks over the originating sector (i.e. as a sector-specific shock), and over other sectors different from the originating one (i.e. as a crosssector shock), also exploring the shocks transmission mechanism across sectors. There are three main results. First, business cycles are mainly generated, in each sector, by technology shocks (primarily described by sector-specific shocks), but they are transmitted across sectors along the sectors’ demand side, i.e. passing through non-technology shocks. Second, technology and nontechnology shocks almost equally share the responsibility of fluctuations in the aggregate manufacturing sector. Third, the aggregate dynamics is driven by the relatively larger sector which is the non-durable good one.

Keywords: Long-run restrictions; sector-specific shocks; cross sector shocks; real business cycle; United States economy. (search for similar items in EconPapers)
JEL-codes: E2 E3 E32 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2008-04
New Economics Papers: this item is included in nep-dge, nep-mac and nep-tid
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Related works:
Working Paper: Technology and non-technology shocks in a two-sector economy (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:isa:wpaper:96

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