Bart Hobijn

Cross-Country Technology Adoption: Making the Theories Face the Facts

We examine the diffusion of more than twenty technologies across twenty-three of the worlds leading industrial economies. Our evidence covers major technology classes such as textile production, steel manufacture, communications, information technology, transportation, and electricity for the period 1788-2001. We document the common patterns observed in the diffusion of this broad range of technologies. Our results suggest a pattern of trickle-down diffusion that is remarkably robust across technologies. Most of the technologies that we consider originate in advanced economies and are adopted there first. Subsequently, they trickle down to countries that lag economically. Our panel data analysis indicates that the most important determinants of the speed at which a country adopts technologies are the countrys human capital endowment, type of government, degree of openness to trade, and adoption of predecessor technologies. We also find that the overall rate of diffusion has increased markedly since World War II because of the convergence in these variables across countries.

Asymptotically perfect and relative convergence of productivity

In this paper we examine the extent to which countries are converging in per capita productivity levels. We propose to use cluster analysis in order to allow for the endogenous selection of converging countries. We formally define convergence in a time series analytical context, derive the necessary and sufficient conditions for convergence, and introduce a cluster analytical procedure that distinguishes several convergence clubs by testing for these conditions using a multivariate test for stationarity. We find a large number of relatively small convergence clubs, which suggests that convergence might not be such a widespread phenomenon. Copyright

Critical values for unit root tests in seasonal time series

In this paper, we present tables with critical values for a variety of tests for seasonal and non-seasonal unit roots in seasonal time series. We consider (extensions of) the Hylleberg et al. and Osborn et al. test procedures. These extensions concern time series with increasing seasonal variation and time series with structural breaks in the seasonal means. For each case, we give the appropriate auxiliary test regression, the test statistics, and the corresponding critical values for a selected set of sample sizes. We also illustrate the practical use of the auxiliary regressions for quarterly new car sales in the Netherlands. Supplementary to this paper, we provide Gauss programs with which one can generate critical values for particular seasonal frequencies and sample sizes.

Are living standards converging

We re-address the convergence issue that is so prominent in the economic growth literature and present evidence as to what extent there is convergence across measures of living standards, alternative to capita income. The four additional indicators that we use are daily calorie supply, daily protein supply, infant mortality rates, and life expectancy at birth. We present results obtained using three techniques previously considered in growth empirics. These are cross-country regressions, distributional dynamics, and cluster analysis. Our main finding is that convergence in real GDP per capita does not imply convergence in other social indicators. However, the qualitative results for all indicators are the same in the sense that the persistent gap between the rich and poor does not only manifest itself in real GDP per capita but also in living standards.

Lobbies and Technology Diffusion

This paper explores whether lobbies slow down technology diffusion. To answer this question, we exploit the differential effect of various institutional attributes that should affect the costs of erecting barriers when the new technology has a technologically close predecessor but not otherwise. We implement this test using a data set that covers the diffusion of twenty technologies for 23 countries over the past two centuries. We find that each of the relevant institutional variables that affect the costs of erecting barriers has a significantly larger effect on the diffusion of technologies with a competing predecessor technology than when no such technology exists. These effects are quantitatively important. Thus, we conclude that lobbies are an important barrier to technology adoption and to development.

Technology Diffusion within Central Banking: The Case of Real-Time Gross Settlement

We examine the diffusion of real-time gross settlement (RTGS) technology across all 174 central banks. RTGS reduces settlement risk and facilitates financial innovation in the settlement of foreign exchange trades. In 1985, only three central banks had implemented RTGS systems, and by year-end 2005, that number had increased to ninety. We find that the RTGS diffusion process is consistent with the standard S-curve prediction. Real GDP per capita, the relative price of capital, and trade patterns explain a significant part of the cross-country variation in RTGS adoption. These determinants are remarkably similar to those that seem to drive the cross-country adoption patterns of other technologies.

Technology Diffusion and Postwar Growth

In the aftermath of World War II, the world’s economies exhibited very different rates of economic recovery. We provide evidence that those countries that caught up the most with the U.S. in the postwar period are those that also saw an acceleration in the speed of adoption of new technologies. This acceleration is correlated with the incidence of U.S. economic aid and technical assistance in the same period. We interpret this as supportive of the interpretation that technology transfers from the U.S. to Western European countries and Japan were an important factor in driving growth in these recipient countries during the postwar decades.

CONDI: a cost-of-nominal-distortions index

We construct a price index with weights for the prices of different PCE (personal consumption expenditures) goods chosen to minimize the welfare costs of nominal distortions. In this cost-of-nominal-distortions index (CONDI), the weights are computed in a multi-sector New Keynesian model with time-dependent price setting. The model is calibrated using U.S. data on the dispersion of price stickiness and labor shares across sectors. We find that the CONDI weights depend mostly on price stickiness and are less affected by the dispersion in labor shares. Moreover, CONDI stabilization closely approximates the optimal monetary policy and leads to negligible welfare losses. Finally, CONDI is better approximated by targeting core inflation rather than headline inflation - and is even better approximated with an adjusted core index that covers total expenditures excluding autos, clothing, energy, and food at home, but including food away from home.

Firms and Flexibility

We study the effects of labor market rigidities and frictions on firm-size distributions and dynamics. We introduce a model of endogenous entrepreneurship, labor market frictions, and firm-size dynamics with many types of rigidities, such as hiring and firing costs, search frictions with vacancy costs, unemployment benefits, firm entry costs, and a tax wedge between wages and labor costs. We use the model to analyze how each rigidity explains firm-size differentials between the United States and France. We find that when we include all rigidities and frictions except hiring costs and search frictions, the model accounts for much of the firm-size differentials between the United States and France. The addition of search frictions with vacancy costs generates implausibly large differentials in firm-size distributions.

On the Importance of the Participation Margin for Market Fluctuations

Conventional analyses of cyclical fluctuations in the labor market ascribe a minor role to the labor force participation margin. In contrast, a flows-based decomposition of the variation in labor market stocks reveals that transitions at the participation margin account for around one-third of the cyclical variation in the unemployment rate. This result is robust to adjustments of data for spurious transitions, and for time aggregation. Inferences from conventional, stocks-based analyses of labor force participation are shown to be subject to a stock-flow fallacy, neglecting the offsetting forces of worker flows that underlie the modest cyclicality of the participation rate. A novel analysis of history dependence in worker flows demonstrates that a large part of the contribution of the participation margin can be traced to cyclical fluctuations in the composition of the unemployed by labor market attachment.