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Sectoral and National Aggregate Disturbances to Industrial Output in Seven European Countries

60 Pages Posted: 19 Aug 2004  

Alan C. Stockman

University of Rochester - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 1987

Abstract

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.

Suggested Citation

Stockman, Alan C., Sectoral and National Aggregate Disturbances to Industrial Output in Seven European Countries (July 1987). NBER Working Paper No. w2313. Available at SSRN: https://ssrn.com/abstract=349153

Alan Stockman (Contact Author)

University of Rochester - Department of Economics ( email )

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Rochester, NY 14627
United States
585-275-7214 (Phone)

National Bureau of Economic Research (NBER)

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