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The Role of Investment-Specific Technological Change in the Business Cycle

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Author Info

  • Greenwood, J.
  • Hercowitz, Z.
  • Krusell, P.

Abstract

This is a specific investigation of the importance of technological change specific to new investment goods for postwar U.S. aggregate fluctuations. A growth model that incorporates this form of technological change is calibrated to U.S. data and simulated, using the relative price of new equipment to identify the process driving investment-specific technology shocks. The analysis suggests that this form of technological change is the source of about 30 percent output fluctuations.

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Bibliographic Info

Paper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 449.

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Length: 26 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:roc:rocher:449

Contact details of provider:
Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.

Related research

Keywords: TECHNOLOGICAL CHANGE ; BUSINESS CYCLES ; INVESTMENTS;

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References

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  1. Richard Rogerson, 2010. "Indivisible Labor, Lotteries and Equilibrium," Levine's Working Paper Archive 250, David K. Levine.
  2. Gregory W. Huffman & Mark A. Wynne, 1995. "The role of intratemporal adjustment costs in a multi-sector economy," Working Papers, Federal Reserve Bank of Dallas 9508, Federal Reserve Bank of Dallas.
  3. Lawrence J. Christiano & Jonas D.M. Fisher, 1995. "Tobin's Q and asset returns: implications for business cycle analysis," Staff Report, Federal Reserve Bank of Minneapolis 200, Federal Reserve Bank of Minneapolis.
  4. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996. "Long-Run Implications of Investment-Specific Technological Change," RCER Working Papers, University of Rochester - Center for Economic Research (RCER) 420, University of Rochester - Center for Economic Research (RCER).
  5. Finn, Mary G., 1995. "Variance properties of Solow's productivity residual and their cyclical implications," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 19(5-7), pages 1249-1281.
  6. Kydland, Finn E. & Prescott, Edward C., 1988. "The workweek of capital and its cyclical implications," Journal of Monetary Economics, Elsevier, Elsevier, vol. 21(2-3), pages 343-360.
  7. Long, John B, Jr & Plosser, Charles I, 1983. "Real Business Cycles," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 91(1), pages 39-69, February.
  8. Thomas F. Cooley & Gary D. Hansen & Edward C. Prescott, 1994. "Equilibrium business cycles with idle resources and variable capacity utilization," Working Papers 94-22, Federal Reserve Bank of Philadelphia.
  9. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, Econometric Society, vol. 50(6), pages 1345-70, November.
  10. Andreas Hornstein & Jack Praschnik, 1997. "Intermediate inputs and sectoral comovement in the business cycle," Working Paper, Federal Reserve Bank of Richmond 97-06, Federal Reserve Bank of Richmond.
  11. Charles L. Evans, 1991. "Productivity shocks and real business cycles," Working Paper Series, Macroeconomic Issues, Federal Reserve Bank of Chicago 91-22, Federal Reserve Bank of Chicago.
  12. Greenwood, Jeremy & Hercowitz, Zvi & Huffman, Gregory W, 1988. "Investment, Capacity Utilization, and the Real Business Cycle," American Economic Review, American Economic Association, American Economic Association, vol. 78(3), pages 402-17, June.
  13. Gary Hansen, 2010. "Indivisible Labor and the Business Cycle," Levine's Working Paper Archive 233, David K. Levine.
  14. Burnside, Craig & Eichenbaum, Martin, 1996. "Factor-Hoarding and the Propagation of Business-Cycle Shocks," American Economic Review, American Economic Association, American Economic Association, vol. 86(5), pages 1154-74, December.
  15. Edward C. Prescott, 1986. "Theory ahead of business cycle measurement," Quarterly Review, Federal Reserve Bank of Minneapolis, Federal Reserve Bank of Minneapolis, issue Fall, pages 9-22.
  16. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : II. New directions," Journal of Monetary Economics, Elsevier, Elsevier, vol. 21(2-3), pages 309-341.
  17. Andreas Hornstein & Per Krusell, 1996. "Can Technology Improvements Cause Productivity Slowdowns?," NBER Chapters, National Bureau of Economic Research, Inc, in: NBER Macroeconomics Annual 1996, Volume 11, pages 209-276 National Bureau of Economic Research, Inc.
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