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Methods versus Substance: Measuring the Effects of Technology Shocks on Hours

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  • José-Víctor Ríos-Rull
  • Frank Schorfheide
  • Cristina Fuentes-Albero
  • Maxym Kryshko
  • Raül Santaeulàlia-Llopis

Abstract

In this paper, we employ both calibration and modern (Bayesian) estimation methods to assess the role of neutral and investment-specific technology shocks in generating fluctuations in hours. Using a neoclassical stochastic growth model, we show how answers are shaped by the identification strategies and not by the statistical approaches. The crucial parameter is the labor supply elasticity. Both a calibration procedure that uses modern assessments of the Frisch elasticity and the estimation procedures result in technology shocks accounting for 2% to 9% of the variation in hours worked in the data. We infer that we should be talking more about identification and less about the choice of particular quantitative approaches.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15375.

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Date of creation: Sep 2009
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Publication status: published as \Methods versus Substance: Measuring the E ects of Technology Shocks on Hours" joint with Frank Schorfheide, Cristina Fuentes-Albero, Raul Santaeulalia-Llopis and Maxym Kryshko. Journal of Monetary Economics Vol. 59, Issue 8, December 2012, pp. 826-46.
Handle: RePEc:nbr:nberwo:15375

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Blog mentions

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  1. Technology shocks and hours: it is the identification, stupid!
    by Economic Logician in Economic Logic on 2009-10-13 14:05:00

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  1. > Macroeconomics > Monetary Theory
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Cited by:
  1. Yongsung Chang & Sun-Bin Kim & Frank Schorfheide, 2010. "Labor-Market Heterogeneity, Aggregation, and the Lucas Critique," NBER Working Papers 16401, National Bureau of Economic Research, Inc.
  2. Alejandro Justiniano & Bruce Preston, 2008. "Can Structural Small Open Economy Models Account for the Influence of Foreign Disturbances?," NBER Working Papers 14547, National Bureau of Economic Research, Inc.
  3. Alejandro Justiniano & Claudio Michelacci, 2011. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the United States and Europe," NBER Chapters, in: NBER International Seminar on Macroeconomics 2011, pages 169-235 National Bureau of Economic Research, Inc.
  4. Cantore, C. & Ferroni, F. & León-Ledesma, M A., 2011. "Interpreting the Hours-Technology time-varying relationship," Working papers, Banque de France 351, Banque de France.
  5. Frank Schorfheide, 2011. "Estimation and Evaluation of DSGE Models: Progress and Challenges," NBER Working Papers 16781, National Bureau of Economic Research, Inc.
  6. Fang Yao, 2010. "Aggregate Hazard Function in Price-Setting: A Bayesian Analysis Using Macro Data," SFB 649 Discussion Papers SFB649DP2010-020, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  7. Enrique Martínez-García & Diego Vilán & Mark Wynne, 2012. "Bayesian estimation of NOEM models: identification and inference in small samples," Globalization and Monetary Policy Institute Working Paper, Federal Reserve Bank of Dallas 105, Federal Reserve Bank of Dallas.
  8. Mennuni, Alessandro, 2014. "The Role of Curvature in the Transformation Frontier between Consumption and Investment," Discussion Paper Series In Economics And Econometrics 1407, Economics Division, School of Social Sciences, University of Southampton.
  9. Alejandro Justiniano & Claudio Michelacci, 2011. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the US and Europe," NBER Working Papers 17429, National Bureau of Economic Research, Inc.
  10. Jesús Rodríguez López, 2010. "Growth, fluctuations and technology in the U.S. post-war economy," Working Papers 10.01, Universidad Pablo de Olavide, Department of Economics.
  11. Franke, Reiner & Jang, Tae-Seok & Sacht, Stephen, 2012. "Moment matching versus Bayesian estimation: Backward-looking behaviour in a New-Keynesian baseline model," Economics Working Papers 2012-08, Christian-Albrechts-University of Kiel, Department of Economics.
  12. Nikolay Iskrev, 2013. "On the distribution of information in the moment structure of DSGE models," 2013 Meeting Papers, Society for Economic Dynamics 339, Society for Economic Dynamics.
  13. Frank Schorfheide, 2012. "EconomicDynamics Interviews Frank Schorfheide on DSGE Model Estimation," EconomicDynamics Newsletter, Review of Economic Dynamics, Review of Economic Dynamics, vol. 13(2), April.

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