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Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?

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  • Jordi Gali

Abstract

The author estimate a decomposition of productivity and hours into technology and nontechnology components. Two results stand out: (1) the estimated conditional correlations of hours and productivity are negative for technology shocks, positive for nontechnology shocks; and (2) hours show a persistent decline in response to a positive technology shock. Most of the results hold for a variety of model specifications and for the majority of G7 countries. The picture that emerges is hard to reconcile with a conventional real-business-cycle interpretation of business cycles but is shown to be consistent with a simple model with monopolistic competition and sticky prices.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 89 (1999)
Issue (Month): 1 (March)
Pages: 249-271

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Handle: RePEc:aea:aecrev:v:89:y:1999:i:1:p:249-271

Note: DOI: 10.1257/aer.89.1.249
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References

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  1. Real Business Cycles with a Human Capital Investment Sector and Endogenous Growth: Persistence, Volatility and Labor Puzzles
    by Christian Zimmermann in NEP-DGE blog on 2011-04-14 19:22:54
  2. Matching Theory and Data: Bayesian Vector Autoregression and Dynamic Stochastic General Equilibrium Models
    by Christian Zimmermann in NEP-DGE blog on 2009-09-27 01:45:04
  3. Productivity and Unemployment
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  4. Central Bank Incompetence Makes Luddites Correct
    by Matthew Yglesias in Moneybox on 2013-03-21 14:37:33
  5. Quartz 18-->Show Me the Money!
    by ? in Confessions of a Supply-Side Liberal on 2013-05-07 07:30:20
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