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The consequences of US technology changes for productivity in advanced economies

Published online by Cambridge University Press:  07 December 2021

Steffen Elstner  and
Svetlana Rujin
Steffen Elstner
Affiliation:
Bundesrechnungshof, Friedrichstraße 130B, 10117 Berlin, Germany
Svetlana Rujin*
Affiliation:
Deutsche Bundesbank, Wilhelm-Epstein-Straße 14, 60431 Frankfurt am Main, Germany
*
*Corresponding author. Email: svetlana.rujin@bundesbank.de.
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Abstract

Since at least the mid-2000s, many advanced economies have experienced low productivity growth. This development is often related to declining productivity gains at the technology frontier, which is largely determined by the US. We challenge this explanation by studying the effects of US technology shocks on productivity levels in advanced economies. We find positive but small spillovers of US technology shocks. For many countries, the elasticity of their productivity with respect to a 1% increase in the US technology level is significantly lower than 1. Thus, the recent US productivity slowdown must have had a limited effect on productivity developments in advanced economies. Nevertheless, after 5 years, the degree of productivity spillovers varies across countries. Therefore, we analyze the role of institutions in shaping these results. Our findings suggest that isolated institutional characteristics are not able to explain the observed various spillover degrees.

Keywords

Total factor productivityinternational spillover effectstechnology shocksstructural VARs

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Type
Articles
Information
Macroeconomic Dynamics , Volume 27 , Issue 3 , April 2023 , pp. 718 - 742
Copyright
© The Author(s), 2021. Published by Cambridge University Press

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