Factor demand linkages and the business cycle: interpreting aggregate fluctuations as sectoral fluctuations
Sean Holly and
Ivan Petrella
CDMA Conference Paper Series from Centre for Dynamic Macroeconomic Analysis
Abstract:
This paper investigates the drivers of industry and aggregate fluctuations. We model the dynamics of a panel of highly disaggregated manufacturing sectors. This allows us to consider directly the linkages between sectors typical of any production system, in a framework where the sectors are fully heterogeneous. We establish that these features are fundamental for the propagation of the shocks in the aggregate economy. Aggregate fluctuations can be accounted for by small industry specific shocks. Moreover, a contemporaneous technology shock to all sectors in the economy, i.e. an aggregate technology shock, implies a positive response in both output and hours at the aggregate level. When this intersectoral channel is neglected we find a negative correlation as with much of the literature. This suggests that the standard technology driven Real Business Cycle paradigm is a reasonable approximation of a more complicated model featuring heterogeneously interconnected sectors.
Keywords: Sectors; Technology shocks; Business cycles; Long-run restrictions; Cross Sectional Dependence. (search for similar items in EconPapers)
JEL-codes: C31 C51 E20 E32 (search for similar items in EconPapers)
Date: 2008-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)
Downloads: (external link)
https://www.st-andrews.ac.uk/CDMA/papers/cp0809.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found
Related works:
Working Paper: Factor demand linkages and the business cycle: Interpreting aggregate fluctuations as sectoral fluctuations (2008) 
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:san:cdmacp:0809
Access Statistics for this paper
More papers in CDMA Conference Paper Series from Centre for Dynamic Macroeconomic Analysis School of Economics and Finance, Castlecliffe, The Scores, Fife, KY16 9AZ. Contact information at EDIRC.
Bibliographic data for series maintained by The School of Economics and Finance ().