Understanding the cross‐country effects of US technology shocks / by Wataru Miyamoto and Thuy Lan Nguyen.: FB3-5/2017-23E-PDF

“Business cycles are substantially correlated across countries. Yet most existing models are not able to generate substantial transmission through international trade. We show that the nature of such transmission depends fundamentally on the features determining the responsiveness of labor supply and labor demand to international relative prices. We augment a standard international macroeconomic model to incorporate three key features: a weak short-run wealth effect on labor supply, variable capital utilization, and imported intermediate inputs for production. This model can generate large and significant endogenous transmission of technology shocks through international trade. We demonstrate this by estimating the model using data for Canada and the United States with limited-information Bayesian methods. We find that this model can account for the substantial transmission of permanent US technology shocks to Canadian aggregate variables such as output and hours, documented in a structural vector autoregression. Transmission through international trade is found to explain the majority of the business cycle co-movement between the United States and Canada"--Abstract, p. ii.

Permanent link to this Catalogue record:
publications.gc.ca/pub?id=9.838718&sl=0

Publication information
Department/Agency Bank of Canada.
Title Understanding the cross‐country effects of US technology shocks / by Wataru Miyamoto and Thuy Lan Nguyen.
Series title Bank of Canada staff working paper, 1701-9397 ; 2017-23
Publication type Series - View Master Record
Language [English]
Format Electronic
Electronic document
Note(s) "June 2017."
Includes bibliographical references (34-38).
Includes abstract in French.
Publishing information [Ottawa] : Bank of Canada, 2017.
Author / Contributor Miyamoto, Wataru.
Nguyen, Thuy Lan.
Description iii, 47 p. : col. charts
Catalogue number
  • FB3-5/2017-23E-PDF
Subject terms Technological innovation
International trade
Economic impact
Request alternate formats
To request an alternate format of a publication, complete the Government of Canada Publications email form. Use the form’s “question or comment” field to specify the requested publication.
Date modified: