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Technology News and the US Economy: Time Variation and Structural Changes

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  • Tim Oliver Berg

Abstract

type="main" xml:id="sjpe12073-abs-0001"> This article examines the time-varying impact of technology news shocks on the US economy during the Post-World War II period using a time-varying parameter vector autoregression. The identification restrictions on the sign of the contemporaneous responses of observable variables are derived from a dynamic stochastic general equilibrium model and robust to parameter uncertainty. I find that the variance of news shocks has decreased over time, contributing to the Great Moderation in real activity and inflation. The importance of news shocks is, however, modest compared to technology surprise and non-technology shocks. Finally, I obtain evidence in favor of a substantial decline in wage rigidity, while the transmission to other variables has been stable.

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  • Tim Oliver Berg, 2015. "Technology News and the US Economy: Time Variation and Structural Changes," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(3), pages 227-263, July.
    • Handle: RePEc:bla:scotjp:v:62:y:2015:i:3:p:227-263
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    File URL: http://hdl.handle.net/10.1111/sjpe.2015.62.issue-3
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    2. Berg, Tim O. & Henzel, Steffen R., 2015. "Point and density forecasts for the euro area using Bayesian VARs," International Journal of Forecasting, Elsevier, vol. 31(4), pages 1067-1095.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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