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Measures of Technology and the Business Cycle: Evidence from Sweden and the U.S

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Author Info
Alexius, Annika (Trade Union Institute for Economic Research)
Carlsson, Mikael (Department of Economics)

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Abstract

Empirical evidence on the cyclical behavior of technology shocks, or the relative importance of technology shocks versus other structural shocks as sources of fluctuations, hinges crucially on the identification of technological changes. In this paper, we study different measures of technology in order to find out (i) to what extent they capture the same underlying phenomenon and (ii) whether the implications for macroeconomic theory vary between approaches. Several variations of the production function approach and structural VAR models are investigated: the classic Solow residual, the refined Solow residuals of Burnside et al (1995) and Basu and Kimball (1997), large cointegrated VAR models as in King et al (1991) and a small VAR in first differences à la Galí (1999). It turns out that the different measures of technological change are reasonably coherent when applied to US data. However, they are often insignificantly related in the case of Sweden. Furthermore, our results do not support the hypothesis that business cycle fluctuations are primarily drive by changes in technology.

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Publisher Info
Paper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 174.

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Length: 47 pages
Date of creation: 28 Dec 2001
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Handle: RePEc:hhs:fiefwp:0174

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Related research
Keywords: Technology shocks Production function approach Structural VAR models

Find related papers by JEL classification:
C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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References listed on IDEAS
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  2. Faust, Jon & Leeper, Eric M, 1997. "When Do Long-Run Identifying Restrictions Give Reliable Results?," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 345-53, July.
    Other versions:
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    Other versions:
  4. John G. Fernald & Susanto Basu, 1999. "Why is productivity procyclical? Why do we care?," International Finance Discussion Papers 638, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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  5. Julio J. Rotemberg & Michael Woodford, 1993. "Dynamic General Equilibrium Models with Imperfectly Competitive Product Markets," NBER Working Papers 4502, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Stockman, Alan C., 1994. "Sources of real exchange-rate fluctuations: A comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 41(1), pages 57-65, December. [Downloadable!] (restricted)
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  15. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-73, September. [Downloadable!] (restricted)
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  16. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-47, October. [Downloadable!] (restricted)
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  20. Carlsson, Mikael, 2000. "Measures of Technology and the Short-Run Responses to Technology Shocks - Is the RBC-Model Consistent with Swedish Manufacturing Data?," Working Paper Series 2000:20, Uppsala University, Department of Economics.
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  21. Nordström Skans, Oskar, 2001. "The effects of working time reductions on wages, actual hours and equilibrium unemployment," Working Paper Series 2001:8, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
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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. Lundborg, Per, 2005. "Wage Fairness, Growth and the Utilization of R&D Workers," Working Paper Series 206, Trade Union Institute for Economic Research. [Downloadable!]
  2. Lundborg, Per, 2005. "Wage Theories for the Swedish Labour Market," Working Paper Series 207, Trade Union Institute for Economic Research. [Downloadable!]
  3. Selén, Jan & Ståhlberg, Ann-Charlotte, 2004. "Wage and Compensation Inequality — How Different?," Working Paper Series 197, Trade Union Institute for Economic Research. [Downloadable!]
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