Short and Long Run Externalities / Eric J. Bartelsman, Ricardo J. Caballero, Richard K. Lyons.

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Bartelsman, Eric J

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w3810.Publication details: Cambridge, Mass. National Bureau of Economic Research 1991.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: In this paper we build upon previous work on external economies in manufacturing [Caballero and Lyons (1989, 1990)] by providing new evidence helpful for discriminating between different types of externalities. We investigate four-digit level input-output relationships and find that, over shorter horizons, the linkage between an industry and its customers is the most important factor in the transmission of externalities. This suggests that transactions externalities accruing primarily to the seller, and/or activity-driven demand externalities are significant for explaining the short-run behavior of measured total factor productivity. Over longer horizons. on the other hand, it is the activity level of suppliers that is more important. This suggests that external effects are also operating through intermediate goods linkages.

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Working Paper	Biblioteca Digital	Colección NBER	nber w3810 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w3807 Patterns in Exchange Rate Forecasts for 25 Currencies /	nber w3808 The Effects of Product Market Competition on Collective Bargaining Agreements: The Case of Foreign Competition in Canada /	nber w3809 Empirical Evidence on European Dual Exchange Rates and Its Relevance For Latin America /	nber w3810 Short and Long Run Externalities /	nber w3811 The Real Exchange Rate, Exports, and Manufacturing Profits: A Theoreti- cal Framework With Some Empirical Support /	nber w3812 Co-Integration, Aggregate Consumption, and the Demand For Imports: A Structural Econometric Investigation /	nber w3813 Endogenous Comparative Advantage, Government, and the Pattern of Trade /	Next

August 1991.

In this paper we build upon previous work on external economies in manufacturing [Caballero and Lyons (1989, 1990)] by providing new evidence helpful for discriminating between different types of externalities. We investigate four-digit level input-output relationships and find that, over shorter horizons, the linkage between an industry and its customers is the most important factor in the transmission of externalities. This suggests that transactions externalities accruing primarily to the seller, and/or activity-driven demand externalities are significant for explaining the short-run behavior of measured total factor productivity. Over longer horizons. on the other hand, it is the activity level of suppliers that is more important. This suggests that external effects are also operating through intermediate goods linkages.