This research paper uses a novel methodological approach to investigate the spillover effects among the key sectors of the US economy.
The paper links the US sectors via a node theoretic scheme based on a general equilibrium framework, whereas it estimates the general equilibrium equation as a Global Vector Autoregressive process, taking into consideration the potential existence of dominant units.
Based on our findings, the dominant sector in the US economy, for the period 1992–2015, is the sector of information technology, finance and communications, a fact that gives credence to the view that the US economy is a service-driven economy. In addition, the US economy seems to benefit by the increased labour mobility across knowledge-intensive sectors, thus avoiding the ‘employment trap’ which in turn enabled the US economy to overcome the financial crisis of 2007.
Firstly, the paper models by means of a network approach which is based on a general equilibrium framework, the linkages between the US sectors while treating the sector of information, technology, communications and finance as dominant, as dictated by its degree of centrality in the network structure. Secondly, the paper offers a robustness analysis regarding both the existence and the identification of dominant sectors (nodes) in the US economy. Thirdly, the paper studies a wide period, namely 1992–2015, fully capturing the recent global recession, while acknowledging the impact of the global crisis through the introduction of the relevant exogenous dummy variables; Lastly and most importantly, it is the first study to apply the GVAR approach in a network general equilibrium framework at the sectoral level.
The authors would like to thank Bart Los for helpful comments on a previous draft of this article.Funding. This research is co-financed by Greece and the European Union (European Social Fund- ESF) through the Operational Programme ≪Human Resources Development, Education and Lifelong Learning≫ in the context of the project “Reinforcement of Postdoctoral Researchers – 2nd Cycle” (MIS-5033021), implemented by the State Scholarships Foundation (IKY).
Konstantakis, K., Michaelides, P., Papageorgiou, T. and Daglis, T. (2020), "Modelling sectoral spillovers in the USA (1992–2015): A GVAR approach", Journal of Economic Studies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JES-10-2018-0378Download as .RIS
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