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Global Effects of US “New Economy” Shocks: the Role of Capital-Skill Complementarity

Tyers, Rod; Yang, Yongzheng

Description

Long run technical change since the 1970s can be characterised alternatively as capital enhancement when capital and skill are complementary, or skill enhancement when capital and skill are substitutes. These characterisations are not equivalent in the short run, however, particularly in the capital-mobile late 1990s, because the implications of the shocks for the return to installed physical capital, and hence the global distribution of investment, depend on which of the two is chosen. The...[Show more]

dc.contributor.authorTyers, Rod
dc.contributor.authorYang, Yongzheng
dc.date.accessioned2002-05-09
dc.date.accessioned2004-05-19T09:35:43Z
dc.date.accessioned2011-01-05T08:25:55Z
dc.date.available2004-05-19T09:35:43Z
dc.date.available2011-01-05T08:25:55Z
dc.date.created2001
dc.identifier.urihttp://hdl.handle.net/1885/40502
dc.identifier.urihttp://digitalcollections.anu.edu.au/handle/1885/40502
dc.description.abstractLong run technical change since the 1970s can be characterised alternatively as capital enhancement when capital and skill are complementary, or skill enhancement when capital and skill are substitutes. These characterisations are not equivalent in the short run, however, particularly in the capital-mobile late 1990s, because the implications of the shocks for the return to installed physical capital, and hence the global distribution of investment, depend on which of the two is chosen. The extent of this non-equivalence is demonstrated in this paper, which examines the short run effects of the acceleration of technology shocks in the US during the late 1990s. Two comparative static multi-product macroeconomic models are constructed around the alternative characterisations and technology shocks are introduced in the US alone. A US economic expansion and gains to US factor owners are common to both but the sectoral and distributional effects within the US economy differ substantially between them. The effects on other regions follow primarily from changes in the distribution of global investment and the associated changes in real exchange rates and hence they are also sensitive to the technology characterisation chosen.
dc.format.extent147032 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoen_AU
dc.subjectcapital-enhancement
dc.subjectskill enhancement
dc.subjectcapital-skill complementarity
dc.subjectnew economy shocks
dc.subjectUS
dc.subjecttechnology shocks
dc.titleGlobal Effects of US “New Economy” Shocks: the Role of Capital-Skill Complementarity
dc.typeWorking/Technical Paper
local.description.refereedno
local.identifier.citationmonthfeb
local.identifier.citationyear2001
local.identifier.eprintid333
local.rights.ispublishedyes
dc.date.issued2001
local.contributor.affiliationANU
local.contributor.affiliationSchool of Economics
local.citationWorking Papers in Economics and Econometrics No. 387
CollectionsANU Research Publications

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