Unobserved Factor Utilization, Technology Shocks and Business Cycles
AbstractWe derive a measure of technological change using firm-level panel data and controlling for imperfect competition, increasing returns and unobserved factor utilization. We show that the latter variable accounts for a relevant portion of the cyclicality of the Solow residual. Our key finding is that technological shocks result in a contraction of inputs on impact. Whilst this result is hard to reconcile with the transmission mechanism of real business cycle models, it is consistent with simple sticky-price models. Using survey information on the frequency and size of price revisions, we show that the evidence on the contractionary effects of technology shocks is indeed much stronger for firms with stickier prices.
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 392.
Date of creation: Feb 2001
Date of revision:
factor hoarding; technology shocks; business cycles;
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Luigi Guiso & Fabiano Schivardi, 2000.
"Information Spillovers and Factor Adjustment,"
Temi di discussione (Economic working papers)
368, Bank of Italy, Economic Research and International Relations Area.
- Yongsung Chang & Jay H. Hong, 2003.
"On the Employment Effect of Technology: Evidence from US Manufacturing for 1958-1996,"
PIER Working Paper Archive
03-004, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Yongsung Chang & Jay H. Hong, 2003. "On the Employment Effect of Technology: Evidence from US Manufacturing for 1958-1996," Macroeconomics 0307004, EconWPA.
- Yongsung Chang & Jay H. Hong, 2003. "On the employment effect of technology : evidence from U.S. manufacturing for 1958-1996," Working Paper 03-06, Federal Reserve Bank of Richmond.
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