What Are the Effects of Technology Shocks on International Labor Markets? (Ruhr Economic Papers No. 806, RWI, April 2019).
Abstract: How do international labor markets respond to a technology shock and what is the main transmission channel across countries with different labor market institutions? To answer these questions, I identify technology shocks using the approach of Galí (1999) and decompose the responses of total hours worked into movements along the extensive and the intensive margins. Overall, my analysis shows that technology shocks have a negative effect on total hours. This effect is stronger in countries with flexible labor markets, where the adjustment takes place along both margins. In contrast, the responses of total hours are smaller in countries with strict labor market legislation, where labor adjustment takes place along the intensive margin. These differences can be linked to the strictness of institutions that target quantity and price adjustments in the labor market.
Presented at: the 5th Conference of the International Association for Applied Econometrics (Montreal, 2018), 22nd International Conference on Macroeconomic Analysis and International Finance (Rethymno, 2018), 11th RGS Doctoral Conference in Economics (Essen, 2018), Loire Valley Institute of Advanced Studies and Orléans Economics Center: "Globalization and Growth in Eurozone: New Challenges" (Orléans, 2017), RWI Brown Bag Seminar (Essen, 2017), Annual Conference of the European Economics and Finance Society (Ljubljana, 2017).
Latest Version (July, 2020), under review
Ruhr Economic Papers No. 827, RWI (February, 2020)
Abstract: Does an improvement in growth prospects lead to a fall in the trade balance? The answer in the literature with a strong focus on the U.S. economy is yes. However, we do not find that improved growth prospects (news shocks) necessarily lead to negative trade balance effects in the G7 countries. We develop a novel news shocks identification scheme, apply it to country-level vector autoregressions (VARs), and obtain the following results. While in the U.S. and Germany, news shocks induce a deterioration of the trade balance, in other G7 countries, news shocks have positive trade balance effects. The differences in the trade balance effects across the G7 countries are mainly due to heterogeneous reactions of exchange rates, labor markets, wealth effects, and monetary policy. Therefore, policy recommendations aimed at reducing the trade imbalances through productivity-enhancing reforms in advanced economies might not entail the targeted effects.
Presented at: the 28th Annual Virtual Symposium of the Society for Nonlinear Dynamics and Econometrics, 35th Annual Congress of the European Economic Association (EEA Virtual 2020), 29th Meeting of the Midwest Econometrics Group (Columbus (OH), 2019).
The Consequences of U.S. Technology Changes for Productivity in Advanced Economies, joint with Steffen Elstner
Ruhr Economic Papers No. 796, RWI (February, 2019), under review
Abstract: Since at least the mid-2000's, many advanced economies have experienced low productivity growth. This development is often related to the declining productivity gains at the technology frontier, which is commonly assumed to be determined by the U.S. We challenge this explanation by studying the effects of changes in U.S. technology on the productivity level in other advanced economies. Overall, we find positive but small spillover effects of U.S. technology shocks. The elasticity of foreign labor productivity with respect to a one percent increase in the U.S. technology level is significantly lower than one for many countries. The recent U.S. productivity slowdown, therefore, had a limited effect on productivity developments in advanced economies. Furthermore, our results suggest that institutional factors are not able to explain cross-country differences in the size of the spillover effects. If any, regulation of the service sector seems to play a role.
Presented at: the 6th Conference of the International Association for Applied Econometrics (Nicosia, 2019), 10th Anniversary of the Nordic Econometric Meeting (Stockholm, 2019), Economic Colloquium Ruhr-University Bochum (Bochum, 2019), 28th Meeting of the Midwest Econometrics Group (Madison (WI), 2018), Junior Female Economist Mentoring Workshop at MEG 2018 (Mentor and Discussant: Marcelle Chauvet, University of California Riverside) (Madison (WI), 2018), RWI Brown Bag Seminar (Essen, 2018).
Work in progress
The Macroeconomic Effects of Uncertainty Shocks: Evidence from the Euro Area Countries