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Complementarities and Comovements

John Shea ()

No 5305, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Short-run interindustry comovement may be due either to common shocks or to complementarities that propagate shocks across sectors. This paper assesses the importance of input-output linkages, aggregate activity spillovers, and local activity spillovers to comovement in postwar US manufacturing. I find that input-output linkages and local activity spillovers are important to comovement, while aggregate activity spillovers are not important. I find that complementarities are important to aggregate volatility, even after I remove observable aggregate shocks from the data. Local spillovers are particularly important, explaining between 15 and 36 percent of manufacturing employment volatility.

JEL-codes: E32 R12 (search for similar items in EconPapers)
Date: 1995-10
Note: ME
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Published as Shea, John S. "Complementarities And Comovements," Journal of Money, Credit and Banking, 2002, v34(2,May), 412-434.

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