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Technological Shocks and the Conduct of Monetary Policy

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  • Mario Amendola
  • Jean-Luc Gaffard
  • Francesco Saraceno

Abstract

This paper analyses the impact of alternative monetary policies on the performances of an economy facing technological changes. It shows that the restructuring of productive capacity necessary to embed the new technologies usually implies initial drops in employment and productivity, that are reabsorbed only if the transition is successful. Furthermore, it shows that the process disrupts the financial structure of firms (the coordination over time of costs and revenues), and makes external financing crucial for a successful restructuring. An ¿optimal¿ monetary policy, in this framework, should then be expansionary during the transition, and tighten once the technological advance is embedded in the system. Thus, we reach conclusions that are in sharp contrast with the policy prescriptions of the New Keynesian approach.

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Bibliographic Info

Article provided by Presses de Sciences-Po in its journal Revue économique.

Volume (Year): 55 (2004)
Issue (Month): 6 ()
Pages: 1241-1263

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Handle: RePEc:cai:recosp:reco_556_1241

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  1. Hicks, John, 1990. "The Unification of Macro-economics," Economic Journal, Royal Economic Society, vol. 100(401), pages 528-38, June.
  2. Amendola, Mario & Gaffard, Jean-Luc, 1998. "Out of Equilibrium," OUP Catalogue, Oxford University Press, number 9780198293804, September.
  3. Jordi Gali, 2002. "New Perspectives on Monetary Policy, Inflation, and the Business Cycle," NBER Working Papers 8767, National Bureau of Economic Research, Inc.
  4. Raouf BOUCEKKINE & Fernando DEL RIO & Omar LICANDRO, 2002. "Embodied Technological Change, Learning-by-Doing and the Productivity Slowdown," Economics Working Papers ECO2002/12, European University Institute.
  5. Marie Amendola & Jean-Luc Gaffard, 2003. "Persistent unemployment and co-ordination issues: an evolutionary perspective," Journal of Evolutionary Economics, Springer, vol. 13(1), pages 1-27, 02.
  6. Jeremy Greenwood & Boyan Jovanovic, 1998. "Accounting for Growth," NBER Working Papers 6647, National Bureau of Economic Research, Inc.
    • Jeremy Greenwood & Boyan Jovanovic, 2001. "Accounting for Growth," NBER Chapters, in: New Developments in Productivity Analysis, pages 179-224 National Bureau of Economic Research, Inc.
  7. Hicks, John, 1989. "A Market Theory of Money," OUP Catalogue, Oxford University Press, number 9780198287247, September.
  8. Richard Clarida & Jordi Galí & Mark Gertler, 1997. "The science of monetary policy: A new Keynesian perspective," Economics Working Papers 356, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 1999.
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Cited by:
  1. Jean-Luc Gaffard, 2008. "Innovation, competition, and growth: Schumpeterian ideas within a Hicksian framework," Journal of Evolutionary Economics, Springer, vol. 18(3), pages 295-311, August.

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