Growth and Employment in Europe: Sustainability and Competitiveness, Department of Economics, WU (Wirtschaftsuniversität Wien)
Sectoral and aggregate technology shocks: Is there a relationship?
() and Andreas Reinstaller
Abstract: We analyze sector specific shocks in productivity and
demand in 19 manufacturing sectors of the Austrian economy. Based on a
structural vector autoregressive (SVAR) model with long run restrictions
developed by Gali's (1999) we extract technology and non-technology shocks
from sectoral andaggregate data and study their patterns and relationship
by means of a principal components analysis. We find a close association of
sectoral and macroeconomic non-technology shocks but only a very weak
association for technology shocks. Impulse-response analysis indicates that
for almost all manufacturing sectors and the Austrian economy productivity
growth rates experience an immediate increase to positive technology shocks
while the hours worked decline. We therefore confirm Gali's results on the
level of manufacturing industries. Finally, we use the identified shocks as
explanatory variables in fixed effect regressions on growth rates of
employment, output and investment. We find that our shocks are closely
associated to employment growth and output growth but not to growth in
investment. The effect of technology shocks is different on the level of
manufacturing industries and the aggregate economy. (A substaintially
revised version of this paper is published in Empirica vol. 32 pp.
Keywords: Economic growth, business cycle, manufacturing industries, technology shocks, employment, SVAR; (follow links to similar papers)
JEL-Codes: D24,; E24,; E30,; O30; (follow links to similar papers)
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