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Revisiting the effect of a technology shock on hours

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  • Choi, Yoonseok

Abstract

A number of studies demonstrate that a positive technology shock leads to a short-run decline in hours (employment). This paper shows that a standard flexible price model can deliver the negative response of hours to the technology shock when hyperbolic discounting is incorporated into the model. This paper also finds that the model can produce similar dynamic responses of key macroeconomic aggregates to those corroborated by previous empirical studies.

Suggested Citation

  • Choi, Yoonseok, 2017. "Revisiting the effect of a technology shock on hours," Economics Letters, Elsevier, vol. 157(C), pages 67-70.
    • Handle: RePEc:eee:ecolet:v:157:y:2017:i:c:p:67-70
    DOI: 10.1016/j.econlet.2017.05.041
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    References listed on IDEAS

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    1. Miles S. Kimball & John G. Fernald & Susanto Basu, 2006. "Are Technology Improvements Contractionary?," American Economic Review, American Economic Association, vol. 96(5), pages 1418-1448, December.
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    Cited by:

    1. Yoonseok Choi, 2019. "Government spending multipliers: New results from a model of naiveté," Economics Bulletin, AccessEcon, vol. 39(3), pages 2122-2128.
    2. Yoonseok Choi, 2020. "Investment Shocks, Consumption Puzzle, And Business Cycles," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1387-1400, July.

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    More about this item

    Keywords

    Technology shock; Hours; Hyperbolic discounting; Naiveté;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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