NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Are Apparent Productive Spillovers a Figment of Specification Error?

Susanto Basu, John G. Fernald

NBER Working Paper No. 5073 (Also Reprint No. r2201)
Issued in March 1995
NBER Program(s):   EFG

Using data on gross output for two-digit manufacturing industries, we find that an increase in the output of one manufacturing sector has little or no significant effect on the productivity of other sectors. Using value-added data, however, we confirm the results of previous studies which find that output spillovers instead appear large. We provide an explanation for these differences, showing why, with imperfect competition, the use of value-added data leads to a spurious finding of large apparent external effects.

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Document Object Identifier (DOI): 10.3386/w5073

Published: Journal of Monetary Economics, vol. 36, pp. 165-188, 1995 citation courtesy of

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