Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280857 
Year of Publication: 
2023
Series/Report no.: 
Working Papers No. 23-13
Publisher: 
Federal Reserve Bank of Boston, Boston, MA
Abstract: 
We study the aggregate effects of sectoral productivity shocks in a multisectoral New Keynesian open-economy model that allows for asymmetric input-output linkages, both within and between countries, as well as for heterogeneity in sectoral Calvo-type price stickiness. Asymmetries in the international production network play a key role in the model's ability to produce large domestic effects of foreign sectoral supply shocks and large differential effects of domestic shocks and global shocks. Larger trade openness and substitutability between domestic inputs and foreign inputs can also significantly amplify the effects of foreign and global sectoral shocks on domestic aggregates. In comparison, sectoral heterogeneity in price stickiness does not materially amplify the domestic responses to productivity shocks that originate abroad.
Subjects: 
International input-output linkages
open-economy New Keynesian model
sectoral shocks
JEL: 
E12
E31
F41
F44
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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