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Article: Understanding the cross-country effects of U.S. technology shocks

TitleUnderstanding the cross-country effects of U.S. technology shocks
Authors
KeywordsImpulse response matching
International comovement
International transmission of business cycles
Structural analysis
Bayesian
Issue Date2017
Citation
Journal of International Economics, 2017, v. 106, p. 143-164 How to Cite?
Abstract© 2017 Elsevier B.V. Business cycles are substantially correlated across countries. Yet, most existing models are not able to generate substantial transmission through international trade. We show that the nature of such transmission depends fundamentally on the features determining the responsiveness of labor supply and labor demand to international relative prices. We augment a standard international macroeconomic model to incorporate three key features: a weak short-run wealth effect on labor supply, variable capital utilization, and imported intermediate inputs for production. This model can generate large and significant endogenous transmission of technology shocks through international trade. We demonstrate this by estimating the model using data for Canada and the United States with limited-information Bayesian methods. We find that this model can account for the substantial transmission of permanent U.S. technology shocks to Canadian aggregate variables such as output and hours, documented in a structural vector autoregression. Transmission through international trade is found to explain the majority of the business cycle comovement between the United States and Canada.
Persistent Identifierhttp://hdl.handle.net/10722/256820
ISSN
2015 Impact Factor: 2.017
2015 SCImago Journal Rankings: 3.723

 

DC FieldValueLanguage
dc.contributor.authorMiyamoto, Wataru-
dc.contributor.authorNguyen, Thuy Lan-
dc.date.accessioned2018-07-24T08:58:01Z-
dc.date.available2018-07-24T08:58:01Z-
dc.date.issued2017-
dc.identifier.citationJournal of International Economics, 2017, v. 106, p. 143-164-
dc.identifier.issn0022-1996-
dc.identifier.urihttp://hdl.handle.net/10722/256820-
dc.description.abstract© 2017 Elsevier B.V. Business cycles are substantially correlated across countries. Yet, most existing models are not able to generate substantial transmission through international trade. We show that the nature of such transmission depends fundamentally on the features determining the responsiveness of labor supply and labor demand to international relative prices. We augment a standard international macroeconomic model to incorporate three key features: a weak short-run wealth effect on labor supply, variable capital utilization, and imported intermediate inputs for production. This model can generate large and significant endogenous transmission of technology shocks through international trade. We demonstrate this by estimating the model using data for Canada and the United States with limited-information Bayesian methods. We find that this model can account for the substantial transmission of permanent U.S. technology shocks to Canadian aggregate variables such as output and hours, documented in a structural vector autoregression. Transmission through international trade is found to explain the majority of the business cycle comovement between the United States and Canada.-
dc.languageeng-
dc.relation.ispartofJournal of International Economics-
dc.subjectImpulse response matching-
dc.subjectInternational comovement-
dc.subjectInternational transmission of business cycles-
dc.subjectStructural analysis-
dc.subjectBayesian-
dc.titleUnderstanding the cross-country effects of U.S. technology shocks-
dc.typeArticle-
dc.description.natureLink_to_subscribed_fulltext-
dc.identifier.doi10.1016/j.jinteco.2017.03.008-
dc.identifier.scopuseid_2-s2.0-85017180271-
dc.identifier.volume106-
dc.identifier.spage143-
dc.identifier.epage164-
dc.identifier.eissn1873-0353-

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