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Technology Shocks Matter

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Author Info
Jonas Fisher

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Abstract

This paper uses the neoclassical growth model to identify the effects of technological change on the US business cycle. In the model there are two sources of technological change: neutral, which affects the production of all goods homogeneously, and investment-specific. Investment-specific shocks are the unique source of the secular trend in the real price of investment goods, while shocks to both kinds of technology are the only factors which affect labor productivity in the long run. Consistent with previous empirical work which considers only neutral shocks, the results suggest these shocks account for little, about 6 percent, of the business cycle variation in hours worked. In contrast, investment-specific shocks account for about 48 percent, a new finding which suggests that technology shocks are an important source of the business cycle

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Paper provided by Econometric Society in its series Econometric Society 2004 North American Winter Meetings with number 14.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nawm04:14

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Keywords: technology shocks business cycle

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Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
E00 - Macroeconomics and Monetary Economics - - General - - - General

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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.:
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Full references

Cited by:
(explanations, 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.)

  1. Lindé, Jesper, 2005. "The Effects of Permanent Technology Shocks on Labour Productivity and Hours in the RBC Model," CEPR Discussion Papers 4827, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Robert Shimer, 2006. "Mismatch," Proceedings, Federal Reserve Bank of San Francisco. [Downloadable!]
    Other versions:
  3. Domenico J. Marchetti & Francesco Nucci, 2004. "Pricing behavior and the comovement of productivity and labor: evidence from firm-level data," Temi di discussione (Economic working papers) 524, Bank of Italy, Economic Research Department. [Downloadable!]
  4. Hashmat Khan & John Tsoukalas, 2005. "Technology Shocks and UK Business Cycles," Macroeconomics 0512006, EconWPA. [Downloadable!]
  5. Luis Alberiko Gil-Alana & Antonio Moreno, . "Technology Shocks and Hours Worked: A Fractional Integration Perspective," Faculty Working Papers 03/06, School of Economics and Business Administration, University of Navarra. [Downloadable!]
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    Other versions:
  7. Suparna Chakraborty, 2005. "Technology as a channel of economic growth in India," Macroeconomics 0512013, EconWPA. [Downloadable!]
  8. Rochelle M. Edge & Thomas Laubach & John C. Williams, 2003. "The responses of wages and prices to technology shocks," Finance and Economics Discussion Series 2003-65, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  9. Suparna Chakraborty, 2005. "Business Cycle Accounting-How important are technology shocks as a propagation mechanism? Some new evidence from Japan," Macroeconomics 0508002, EconWPA. [Downloadable!]
  10. Lawrence J Christiano & Martin Eichenbaum & Robert Vigfusson, 2003. "How do Canadian hours worked respond to a technology shock?," International Finance Discussion Papers 774, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  11. Vivien Lewis, 2006. "Macroeconomic fluctuations and firm entry : theory and evidence," Research series 200610-13, National Bank of Belgium. [Downloadable!]
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  12. Kawamoto, Takuji, 2005. "What Do the Purified Solow Residuals Tell Us about Japan's Lost Decade?," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 23(1), pages 113-48, February. [Downloadable!]
  13. Lawrence J. Christiano & Martin Eichenbaum & Robert Vigfusson, 2003. "What happens after a technology shock?," International Finance Discussion Papers 768, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  14. Marchetti, Domenico J. & Nucci, Francesco, 2006. "Pricing Behaviour and the Response of Hours to Productivity Shocks," CEPR Discussion Papers 5504, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  16. Jean Boivin & Marc Giannoni, 2006. "DSGE Models in a Data-Rich Environment," NBER Technical Working Papers 0332, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  17. Francesco Busato & Alessandro Girardi & Amadeo Argentiero, 2005. "Technology and non-technology shocks in a two-sector economy," Economics Working Papers 2005-11, School of Economics and Management, University of Aarhus. [Downloadable!]
  18. Antonio Acconcia & Saverio Simonelli, 2005. "Revisiting the one type permanent shocks hypothesis: Aggregate fluctuations in a multi-sector economy," CSEF Working Papers 137, Centre for Studies in Economics and Finance (CSEF), University of Salerno, Italy, revised 01 Sep 2006. [Downloadable!]
  19. Francesco Busato, 2004. "Relative Demand Shocks," Economics Working Papers 2004-11, School of Economics and Management, University of Aarhus. [Downloadable!]
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