NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Sectoral and National Aggregate Disturbances to Industrial Output in Seven European Countries

Alan C. Stockman

NBER Working Paper No. 2313 (Also Reprint No. r1254)
Issued in July 1987
NBER Program(s):Economic Fluctuations and Growth

A class of real business cycle models suggests that shocks to technology can explain aggregate fluctuations in output and employment. This paper begins from the premise that shocks to productivity may vary across industries but are unlikely to vary systematically across national boundaries for a set of developed countries. Alternative sources of macroeconomic fluctuations, however, such as those due to nation-specific government policies, may produce variations in output growth across nations that are common to industries. This paper discusses these implications within the context of a simple theoretical model, then the paper decomposes the quarterly and annual growth rate of industrial production in two-digit manufacturing industries in seven European countries and the United States into components that are specific to industries but common to nations, and idiosyncratic components. The paper shows that shocks that are nation-specific and common to industries are important, and cast doubt on the hypothesis that most macroeconomic fluctuations can be ascribed to shocks to technology.

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Document Object Identifier (DOI): 10.3386/w2313

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