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Sectoral Fiscal Multipliers and Technology in Open Economy

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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Sectoral Fiscal Multipliers and Technology in Open Economy. / Cardi, Olivier; Restout, Romain.
In: Journal of International Economics, Vol. 144, 103789, 30.09.2023.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Cardi, O & Restout, R 2023, 'Sectoral Fiscal Multipliers and Technology in Open Economy', Journal of International Economics, vol. 144, 103789. https://doi.org/10.1016/j.jinteco.2023.103789

APA

Cardi, O., & Restout, R. (2023). Sectoral Fiscal Multipliers and Technology in Open Economy. Journal of International Economics, 144, Article 103789. https://doi.org/10.1016/j.jinteco.2023.103789

Vancouver

Cardi O, Restout R. Sectoral Fiscal Multipliers and Technology in Open Economy. Journal of International Economics. 2023 Sept 30;144:103789. Epub 2023 Jul 11. doi: 10.1016/j.jinteco.2023.103789

Author

Cardi, Olivier ; Restout, Romain. / Sectoral Fiscal Multipliers and Technology in Open Economy. In: Journal of International Economics. 2023 ; Vol. 144.

Bibtex

@article{a60f9d04912840668e1386e1d2f170f8,
title = "Sectoral Fiscal Multipliers and Technology in Open Economy",
abstract = "Our evidence reveals that the rise in real GDP is uniformly distributed across sectors following a government spending shock while labor growth is concentrated in non-traded industries. A rationale behind these two findings lies in technology which responds endogenously to the government spending shock. While technology improvements are concentrated in traded industries, technological change is biased toward labor (capital) in non-traded (traded) industries. To account for our evidence, we consider a semi-small open economy model with tradables and non-tradables where both capital and technology can be used more intensively. While financial openness amplifies the biasedness of the demand shock toward non-traded goods, labor mobility costs, imperfect substitutability between home- and foreign-produced traded goods and endogenous capital utilization are necessary conditions for giving rise to traded technology improvement. The model can reproduce the size of fiscal multipliers once we let technology adjustment costs together with factor-biased technological change vary across sectors.",
keywords = "Sector-biased government spending shocks, Endogenous technological change, Factor-augmenting efficiency, Open economy, Labor reallocation, CES production function, Labor income share",
author = "Olivier Cardi and Romain Restout",
year = "2023",
month = sep,
day = "30",
doi = "10.1016/j.jinteco.2023.103789",
language = "English",
volume = "144",
journal = "Journal of International Economics",
issn = "0022-1996",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Sectoral Fiscal Multipliers and Technology in Open Economy

AU - Cardi, Olivier

AU - Restout, Romain

PY - 2023/9/30

Y1 - 2023/9/30

N2 - Our evidence reveals that the rise in real GDP is uniformly distributed across sectors following a government spending shock while labor growth is concentrated in non-traded industries. A rationale behind these two findings lies in technology which responds endogenously to the government spending shock. While technology improvements are concentrated in traded industries, technological change is biased toward labor (capital) in non-traded (traded) industries. To account for our evidence, we consider a semi-small open economy model with tradables and non-tradables where both capital and technology can be used more intensively. While financial openness amplifies the biasedness of the demand shock toward non-traded goods, labor mobility costs, imperfect substitutability between home- and foreign-produced traded goods and endogenous capital utilization are necessary conditions for giving rise to traded technology improvement. The model can reproduce the size of fiscal multipliers once we let technology adjustment costs together with factor-biased technological change vary across sectors.

AB - Our evidence reveals that the rise in real GDP is uniformly distributed across sectors following a government spending shock while labor growth is concentrated in non-traded industries. A rationale behind these two findings lies in technology which responds endogenously to the government spending shock. While technology improvements are concentrated in traded industries, technological change is biased toward labor (capital) in non-traded (traded) industries. To account for our evidence, we consider a semi-small open economy model with tradables and non-tradables where both capital and technology can be used more intensively. While financial openness amplifies the biasedness of the demand shock toward non-traded goods, labor mobility costs, imperfect substitutability between home- and foreign-produced traded goods and endogenous capital utilization are necessary conditions for giving rise to traded technology improvement. The model can reproduce the size of fiscal multipliers once we let technology adjustment costs together with factor-biased technological change vary across sectors.

KW - Sector-biased government spending shocks

KW - Endogenous technological change

KW - Factor-augmenting efficiency

KW - Open economy

KW - Labor reallocation

KW - CES production function

KW - Labor income share

U2 - 10.1016/j.jinteco.2023.103789

DO - 10.1016/j.jinteco.2023.103789

M3 - Journal article

VL - 144

JO - Journal of International Economics

JF - Journal of International Economics

SN - 0022-1996

M1 - 103789

ER -