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Revisiting the one type permanent shocks hypothesis: Aggregate fluctuations in a multi-sector economy

Antonio Acconcia () and Saverio Simonelli

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: This paper relies on sectoral-level data to interpret aggregate fluctuations of labor productivity and employment in US as due to exogenous disturbances. A shock determining permanent effect on the real investment good price may reasonably be interpreted as an investment-specific technology shock, since it mainly produces long-run effect on labor productivity in the durable goods producing sector. A transitory shock on the real investment price may instead be interpreted as a sectorneutral disturbance since it homogeneously affects the labor productivity across sectors. Finally, sectoral evidence suggests that the near-zero correlation between aggregate productivity and employment growth rates may be explained as the overall outcome of positive and negative correlations within, respectively, the durable and nondurable goods producing sectors.

Keywords: Technology shock; Dynamic Factor Model; Long-Run Restrictions; Sectors (search for similar items in EconPapers)
JEL-codes: C10 E32 O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2005-04-01, Revised 2006-09-01
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Published in Journal of Economic Dynamics and Control, 2008, Vol.32, pages 3009-3031

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