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Do SVAR Models Justify Discarding the Technology Shock-Driven Real Business Cycle Hypothesis?

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  • Hyeon-seung Huh

    (Yonsei University, Republic of Korea)

  • David Kim

    (University of Sydney, Australia)

Abstract

This paper investigates the validity of technology shocks as a driving force of U.S. business cycle fluctuations. Using three well-known structural vector autoregression (SVAR) models, we analyze how structural shocks are associated with the variations of output and hours worked at business cycle frequencies. Empirical results reveal that technology shocks remain an important source of cyclical movements in output. Furthermore, a positive technology shock does not lead to a decline in hours worked in contrast to previous studies. Our SVARbased evidence does not support discarding a technology shock-driven business cycle theory.

Suggested Citation

  • Hyeon-seung Huh & David Kim, 2013. "Do SVAR Models Justify Discarding the Technology Shock-Driven Real Business Cycle Hypothesis?," Working papers 2013rwp-59, Yonsei University, Yonsei Economics Research Institute.
    • Handle: RePEc:yon:wpaper:2013rwp-59
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    More about this item

    Keywords

    Structural vector autoregression; Technology shocks; Demand shocks; Real business cycles;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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