Abstract
The main purpose of this paper is to investigate the effects of the international transmission of productivity shocks on the macroeconomics by using the SVAR analysis. The main dataset for this paper comes from OECD Statistics and IMF over the period 1995:1-2014:4, and here the main variables include labor productivity, manufacturing output, consumption, net exports, terms of trade, the relative domestic producer price index over the domestic consumer price index and real exchange rate. A widespread view of the transmission mechanism holds that productivity shocks in macroeconomics plays an important rule. The results suggest that an increase in productivity shocks leads to increases in manufacturing output and consumption. However, the effect in net export is not significant and real exchange rate movements are dominated by movements in the terms of trade, rather than by the HBS effect. We found that because a productivity increase in the traded goods sector of a country should lower the international relative price of domestic tradables.