Journal Articles
Discussion Papers
Journal Article
2007-15
Technology Shocks and Employment in Open Economies
December 20, 2007
(Version 2:
May 14, 2008)
Abstract
A growing body of empirical evidence suggests that a positive technology shock leads to a temporary decline in employment. A two-country model is used to demonstrate that the open economy dimension can enhance the ability of sticky price models to account for the evidence. The reasoning is as follows. An improvement in technology appreciates the nominal exchange rate. Under producer-currency pricing, the exchange rate appreciation shifts global demand toward foreign goods away from domestic goods. This causes a temporary decline in domestic employment. If the expenditure-switching effect is sufficiently strong, a technology shock also has a negative effect on output in the short run.
Versions
Citation
Juha Tervala (2007). Technology Shocks and Employment in Open Economies. Economics: The Open-Access, Open-Assessment E-Journal, Vol. 1, 2007-15 (Version 2).
http://www.economics-ejournal.org/economics/journalarticles/2007-15
Content and coverage - Basanta Sahu - December 21, 2007 - 11:43
It would have been iteresting if more countries of different structural and macro economic changes taken into account. This model should be extended.