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    Factor demand linkages, technology shocks, and the business cycle

    Holly, S. and Petrella, Ivan (2012) Factor demand linkages, technology shocks, and the business cycle. Review of Economics and Statistics 94 (4), pp. 948-963. ISSN 0034-6535.

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    This paper argues that factor demand linkages can be important for the transmission of both sectoral and aggregate shocks. We show this using a panel of highly disaggregated manufacturing sectors together with sectoral structural VARs. When sectoral interactions are explicitly accounted for, a contemporaneous technology shock to all manufacturing sectors implies a positive response in both output and hours at the aggregate level. Otherwise there is a negative correlation, as in much of the existing literature. Furthermore, we find that technology shocks are important drivers of the business cycle.


    Item Type: Article
    School: Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School
    Depositing User: Ivan Petrella
    Date Deposited: 28 May 2013 09:43
    Last Modified: 02 Aug 2023 17:04


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