Are apparent productive spillovers a figment of specification error?

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Are apparent productive spillovers a figment of specification error?

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Susanto Basu
John G. Fernald

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Abstract

Using data on gross output for two-digit manufacturing industries, we find that an increase in the output of one manufacturing sector has little or no significant effect on the productivity of other sectors. Using value-added data, however, we confirm the results of previous studies which find that output spillovers instead appear large. We provide an explanation for these differences, showing why, with imperfect competition, the use of value-added data leads to a spurious finding of large apparent external effects.

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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series International Finance Discussion Papers with number 463.

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Date of creation: 1994
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Handle: RePEc:fip:fedgif:463

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Keywords: Productivity;

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Article
- Basu, Susanto & Fernald, John G., 1995. "Are apparent productive spillovers a figment of specification error?," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 165-188, August. [Downloadable!] (restricted)
Paper
- Susanto Basu & John G. Fernald, 1999. "Are Apparent Productive Spillovers a Figment of Specification Error?," NBER Working Papers 5073, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Basu, S. & Fernald, J.G., 1993. "Are Apparent Productive Spillovers a Figment of Specification Error," Papers 93-22, Michigan - Center for Research on Economic & Social Theory.

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Other versions:
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Other versions:
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repec:fth:harver:1487 is not listed on IDEAS
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Other versions:
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Other versions:
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