Hostname: page-component-8448b6f56d-qsmjn Total loading time: 0 Render date: 2024-04-24T06:47:43.680Z Has data issue: false hasContentIssue false
  • English
  • Français

The consequences of US technology changes for productivity in advanced economies

Published online by Cambridge University Press:  07 December 2021

Steffen Elstner  and
Svetlana Rujin
Steffen Elstner
Affiliation:
Bundesrechnungshof, Friedrichstraße 130B, 10117 Berlin, Germany
Svetlana Rujin*
Affiliation:
Deutsche Bundesbank, Wilhelm-Epstein-Straße 14, 60431 Frankfurt am Main, Germany
*
*Corresponding author. Email: svetlana.rujin@bundesbank.de.
Get access Rights & Permissions [Opens in a new window]

Abstract

Since at least the mid-2000s, many advanced economies have experienced low productivity growth. This development is often related to declining productivity gains at the technology frontier, which is largely determined by the US. We challenge this explanation by studying the effects of US technology shocks on productivity levels in advanced economies. We find positive but small spillovers of US technology shocks. For many countries, the elasticity of their productivity with respect to a 1% increase in the US technology level is significantly lower than 1. Thus, the recent US productivity slowdown must have had a limited effect on productivity developments in advanced economies. Nevertheless, after 5 years, the degree of productivity spillovers varies across countries. Therefore, we analyze the role of institutions in shaping these results. Our findings suggest that isolated institutional characteristics are not able to explain the observed various spillover degrees.

Keywords

Total factor productivityinternational spillover effectstechnology shocksstructural VARs
Type
Articles
Information
Macroeconomic Dynamics , Volume 27 , Issue 3 , April 2023 , pp. 718 - 742
Copyright
© The Author(s), 2021. Published by Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D. (2009) Introduction to Modern Economic Growth. Princeton, NJ: Princeton University Press.Google Scholar
Acemoglu, D. and Zilibotti, F. (2001) Productivity differences. The Quarterly Journal of Economics 116(2), 563–606.CrossRefGoogle Scholar
Ambler, S., Cardia, E. and Zimmermann, C. (2004) International business cycles: What are the facts? Journal of Monetary Economics 51(2), 257–276.CrossRefGoogle Scholar
Andrews, D., Criscuolo, C. and Gal, P. N. (2015) Frontier Firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries. OECD Productivity Working Papers: No. 2, OECD Publishing.Google Scholar
Anzoategui, D., Comin, D., Gertler, M. and Martinez, J. (2019) Endogenous technology adoption and R&D as sources of business cycle persistence. AEJ: Macroeconomics 11(3), 67–110.Google Scholar
Backus, D. K., Kehoe, P. J. and Kydland, F. E. (1992) International real business cycles. Journal of Political Economy 100(4), 745–775.Google Scholar
Basu, S., Fernald, J., Fisher, J. and Kimball, M. (2013) Sector-Specific Technical Change. Mimeo.Google Scholar
Basu, S., Fernald, J. G. and Kimball, M. S. (2006) Are technology improvements contractionary? American Economic Review 96(5), 1418–1448.CrossRefGoogle Scholar
Bekaert, G., Harvey, C. R. and Lundblad, C. (2011) Financial openness and productivity. World Development 39(1), 1–19.CrossRefGoogle Scholar
Benhabib, J., Perla, J. and Tonetti, C. (2014) Catch-up and fall-back through innovation and imitation. Journal of Economic Growth 19(1), 1–35.Google Scholar
Bouis, R., Causa, O., Demmou, L., Duval, R. and Zdzienicka, A. (2012) The Short-Term Effects of Structural Reforms: An Empirical Analysis. OECD Economics Department Working Papers: No. 949, OECD Publishing.Google Scholar
Bourlès, R., Cette, G., Lopez, J., Mairesse, J. and Nicoletti, G. (2013) Do product market regulations in upstream sectors curb productivity growth? Panel data evidence for OECD countries. The Review of Economics and Statistics 95(5), 1750–1768.Google Scholar
Byrne, D. M., Fernald, J. G. and Reinsdorf, M. B. (2016) Does the United States have a productivity slowdown or a measurement problem? Brookings Papers on Economic Activity 2016(1), 109–182.CrossRefGoogle Scholar
Calza, A., Monacelli, T. and Stracca, L. (2013) Housing finance and monetary policy. Journal of the European Economic Association 11, 101–122.CrossRefGoogle Scholar
Canova, F., Lopez-Salido, D. and Michelacci, C. (2010) The effects of technology shocks on hours and output: A robustness analysis. Journal of Applied Econometrics 25(5), 755–773.CrossRefGoogle Scholar
Cette, G., Fernald, J. and Mojon, B. (2016) The pre-great recession slowdown in productivity. European Economic Review 88(C), 3–20.CrossRefGoogle Scholar
Cette, G., Lopez, J. and Mairesse, J. (2016) Market regulations, prices, and productivity. American Economic Review 106(5), 104–108.CrossRefGoogle Scholar
Chari, V., Kehoe, P. J. and McGrattan, E. R. (2008) Are structural VARs with long-run restrictions useful in developing business cycle theory? Journal of Monetary Economics 55(8), 1337–1352.CrossRefGoogle Scholar
Chow, G. C. and Lin, A.-l. (1971) Best linear unbiased interpolation, distribution, and extrapolation of time series by related series. The Review of Economics and Statistics 53(4), 372–375.CrossRefGoogle Scholar
Comin, D. and Hobijn, B. (2010) An exploration of technology diffusion. American Economic Review 100(5), 2031–2059.CrossRefGoogle Scholar
Comin, D., Hobijn, B. and Rovito, E. (2008) Technology usage lags. Journal of Economic Growth 13(4), 237–256.CrossRefGoogle Scholar
Comin, D. A., Gonzalez, J. Q., Schmitz, T. G. and Trigari, A. (2020) Measuring TFP: The Role of Profits, Adjustment Costs, and Capacity Utilization. NBER Working Papers: No. 28008, National Bureau of Economic Research, Inc.Google Scholar
Corsetti, G., Dedola, L. and Leduc, S. (2008) International risk sharing and the transmission of productivity shocks. The Review of Economic Studies 75(2), 443–473.CrossRefGoogle Scholar
Corsetti, G., Dedola, L. and Leduc, S. (2014). The international dimension of productivity and demand shocks in the US economy. Journal of the European Economic Association 12(1), 153–176.CrossRefGoogle Scholar
Dabla-Norris, E., Guo, S., Haksar, V., Kim, M., Kochhar, K., Wiseman, K. and Zdzienicka, A. (2015) The New Normal; A Sector-level Perspective on Productivity Trends in Advanced Economies. IMF Staff Discussion Notes 15/3, International Monetary Fund.Google Scholar
Decker, R., Haltiwanger, J., Jarmin, R. and Miranda, J. (2014) The Secular Decline in Business Dynamism in the US. Unpublished draft, University of Maryland.Google Scholar
Enders, Z. and Müller, G. J. (2009) On the international transmission of technology shocks. Journal of International Economics 78(1), 45–59.CrossRefGoogle Scholar
Erceg, C. J., Guerrieri, L. and Gust, C. (2005) Can long-run restrictions identify technology shocks? Journal of the European Economic Association 3(6), 1237–1278.CrossRefGoogle Scholar
Faust, J. and Leeper, E. M. (1997) When do long-run identifying restrictions give reliable results? Journal of Business & Economic Statistics 15(3), 345–353.Google Scholar
Feenstra, R. C., Inklaar, R. and Timmer, M. P. (2015) The next generation of the Penn World Table. American Economic Review 105(10), 3150–3182.Google Scholar
Fernald, J. G. (2014) A Quarterly, Utilization-Adjusted Series on Total Factor Productivity. Working Paper Series 2012-19, Federal Reserve Bank of San Francisco.Google Scholar
Fernald, J. G. (2015) Productivity and potential output before, during, and after the great recession. NBER Macroeconomics Annual 29(1), 1–51.Google Scholar
Francis, N., Owyang, M. T., Roush, J. E. and DiCecio, R. (2014) A flexible finite-horizon alternative to long-run restrictions with an application to technology shocks. The Review of Economics and Statistics 96(4), 638–647.CrossRefGoogle Scholar
Galí, J. (1999) Technology, employment, and the business cycle: Do technology shocks explain aggregate fluctuations? American Economic Review 89(1), 249–271.CrossRefGoogle Scholar
Gnocchi, S., Lagerborg, A. and Pappa, E. (2015) Do labor market institutions matter for business cycles? Journal of Economic Dynamics and Control 51(C), 299–317.Google Scholar
Gonçalves, S. and Kilian, L. (2004) Bootstrapping autoregressions with conditional Heteroskedasticity of Unknown Form. Journal of Econometrics 123(1), 89–120.CrossRefGoogle Scholar
Gordon, R. J. (2012) Is US Economic Growth Over? Faltering Innovation Confronts the Six Headwinds. Technical report, National Bureau of Economic Research.CrossRefGoogle Scholar
Growiec, J. (2012) The world technology frontier: What can we learn from the US states? Oxford Bulletin of Economics and Statistics 74(6), 777–807.CrossRefGoogle Scholar
Hall, R. E. and Jones, C. I. (1999) Why do some countries produce so much more output per worker than others? The Quarterly Journal of Economics 114(1), 83–116.CrossRefGoogle Scholar
Heathcote, J. and Perri, F. (2002) Financial autarky and international business cycles. Journal of Monetary Economics 49(3), 601–627.CrossRefGoogle Scholar
Huo, Z., Levchenko, A. A. and Pandalai-Nayar, N. (2020) Utilization-Adjusted TFP Across Countries: Measurement and Implications for International Comovement. NBER Working Papers: No. 26803, National Bureau of Economic Research, Inc.Google Scholar
Imbs, J. M. (1999) Technology, growth and the business cycle. Journal of Monetary Economics 44(1), 65–80.Google Scholar
IMF (2015) World Economic Outlook: Uneven Growth: Short-and Long-Term Factors.Google Scholar
Inklaar, R. and Diewert, W. E. (2016) Measuring industry productivity and cross-country convergence. Journal of Econometrics 191(2), 426–433.CrossRefGoogle Scholar
Keller, W. (2004) International technology diffusion. Journal of Economic Literature 42(3), 752–782.CrossRefGoogle Scholar
Keller, W. (2010) International trade, foreign direct investment, and technology spillovers. In: Hall, B. H. and Rosenberg, N. (eds.), Handbook of the Economics of Innovation, vol. 2, Chapter 19, pp. 793–829. Elsevier.CrossRefGoogle Scholar
Kose, A., Prasad, E. and Terrones, M. (2009) Does openness to international financial flows raise productivity growth? Journal of International Money and Finance 28(4), 554–580.Google Scholar
Kose, M. A., Otrok, C. and Whiteman, C. H. (2003) International business cycles: World, region, and country-specific factors. American Economic Review 93(4), 1216–1239.CrossRefGoogle Scholar
Koske, I., Wanner, I., Bitetti, R. and Barbiero, O. (2015) The 2013 Update of the OECD’s Database on Product Market Regulation: Policy Insights for OECD and Non-OECD Countries. OECD Economics Department Working Papers: No. 1200, OECD Publishing.Google Scholar
Kurmann, A. and Sims, E. (2021) Revisions in utilization-adjusted TFP and robust identification of news shocks. The Review of Economics and Statistics 103(2), 216–235.CrossRefGoogle Scholar
Lagos, R. (2006) A model of TFP. Review of Economic Studies 73(4), 983–1007.Google Scholar
Levchenko, A. A. and Pandalai-Nayar, N. (2020) TFP, news, and “Sentiments”: The international transmission of business cycles. Journal of the European Economic Association 18(1), 302–341.CrossRefGoogle Scholar
Masuch, K., Moshammer, E. and Pierluigi, B. (2016) Institutions and Growth in Europe. CEPS Papers: No. 11482, Centre for European Policy Studies.Google Scholar
Mertens, K. and Ravn, M. O. (2013) The dynamic effects of personal and corporate income tax changes in the United States. American Economic Review 103(4), 1212–1247.CrossRefGoogle Scholar
Mertens, K. and Ravn, M. O. (2014) A reconciliation of SVAR and narrative estimates of tax multipliers. Journal of Monetary Economics 68(S), 1–19.CrossRefGoogle Scholar
Miyamoto, W. and Nguyen, T. L. (2017) Understanding the cross-country effects of US technology shocks. Journal of International Economics 106(C), 143–164.CrossRefGoogle Scholar
Nickell, S. J. (1981) Biases in dynamic models with fixed effects. Econometrica 49(6), 1417–1426.Google Scholar
Nicoletti, G. and Scarpetta, S. (2003) Regulation, Productivity and Growth: OECD Evidence. OECD Economics Department Working Papers: No. 347, OECD Publishing.CrossRefGoogle Scholar
Ohanian, L. E. and Raffo, A. (2012) Aggregate hours worked in OECD countries: New measurement and implications for business cycles. Journal of Monetary Economics 59(1), 40–56.CrossRefGoogle Scholar
Rabanal, P., Rubio-Ramrez, J. F. and Tuesta, V. (2011) Cointegrated TFP processes and international business cycles. Journal of Monetary Economics 58(2), 156–171.CrossRefGoogle Scholar
Rujin, S. (2019) What are the Effects of Technology Shocks on International Labor Markets? Ruhr Economic Papers 806, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.Google Scholar
Summers, P. M. (2005) What caused the great moderation?: Some cross-country evidence. Economic Review 90(Q III), 5–32.Google Scholar
Svirydzenka, K. (2016) Introducing a New Broad-based Index of Financial Development. IMF Working Papers: No. 2016/005, International Monetary Fund.CrossRefGoogle Scholar
Syverson, C. (2017) Challenges to mismeasurement explanations for the US productivity slowdown. Journal of Economic Perspectives 31(2), 165–186.CrossRefGoogle Scholar
Timmer, M. P., Dietzenbacher, E., Los, B., Stehrer, R. and De Vries, G. J. (2015) An illustrated user guide to the world input–output database: The case of global automotive production. Review of International Economics 23(3), 575–605.CrossRefGoogle Scholar
Uhlig, H. (2004a) Do technology shocks lead to a fall in total hours worked? Journal of the European Economic Association 2(2–3), 361–371.CrossRefGoogle Scholar
Uhlig, H. (2004b) What Moves GNP? Econometric Society 2004 North American Winter Meetings 636, Econometric Society.Google Scholar
van Ark, B., O’Mahoney, M. and Timmer, M. P. (2008) The productivity gap between Europe and the United States: Trends and causes. Journal of Economic Perspectives 22(1), 25–44.CrossRefGoogle Scholar