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Read All about It!! What Happens Following a Technology Shock?

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  • Michelle Alexopoulos

Abstract

Existing indicators of technical change are plagued by shortcomings. I present new measures based on books published in the field of technology that resolve many of these problems and use them to identify the impact of technology shocks on economic activity. They are positively linked to changes in R&D and scientific knowledge, and capture the new technologies' commercialization dates. Changes in information technology are found to be important sources of economic fluctuations in the post-WWII period, and total factor productivity, investment, and, to a lesser extent, labor are all shown to increase following a positive technology shock. (JEL E22, E23, E32, O33, O34, O47 )

Suggested Citation

  • Michelle Alexopoulos, 2011. "Read All about It!! What Happens Following a Technology Shock?," American Economic Review, American Economic Association, vol. 101(4), pages 1144-1179, June.
  • Handle: RePEc:aea:aecrev:v:101:y:2011:i:4:p:1144-79
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    1. Miles S. Kimball & John G. Fernald & Susanto Basu, 2006. "Are Technology Improvements Contractionary?," American Economic Review, American Economic Association, pages 1418-1448.
    2. Galí, Jordi & Rabanal, Pau, 2004. "Technology Shocks and Aggregate Fluctuations: How Well Does the RBC Model Fit Post-War US Data?," CEPR Discussion Papers 4522, C.E.P.R. Discussion Papers.
    3. John Shea, 1999. "What Do Technology Shocks Do?," NBER Chapters,in: NBER Macroeconomics Annual 1998, volume 13, pages 275-322 National Bureau of Economic Research, Inc.
    4. Miles S. Kimball & John G. Fernald & Susanto Basu, 2006. "Are Technology Improvements Contractionary?," American Economic Review, American Economic Association, pages 1418-1448.
    5. Wilson, Daniel J., 2009. "IT and Beyond: The Contribution of Heterogeneous Capital to Productivity," Journal of Business & Economic Statistics, American Statistical Association, vol. 27, pages 52-70.
    6. Paul Beaudry & Franck Portier, 2006. "Stock Prices, News, and Economic Fluctuations," American Economic Review, American Economic Association, pages 1293-1307.
    7. Victor Zarnowitz, 1992. "Business Cycles: Theory, History, Indicators, and Forecasting," NBER Books, National Bureau of Economic Research, Inc, number zarn92-1.
    8. Michelle Alexopoulos & Jon Cohen, 2009. "Volumes of Evidence: Examining Technical Change Last Century Through a New Lens," Working Papers tecipa-350, University of Toronto, Department of Economics.
    9. Lawrence J. Christiano & Martin Eichenbaum & Robert J. Vigfusson, 2003. "What happens after a technology shock?," International Finance Discussion Papers 768, Board of Governors of the Federal Reserve System (U.S.).
    10. Luca Gambetti & Jordi Galí, 2009. "On the Sources of the Great Moderation," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 26-57, January.
    11. Ross, D. R. & Zimmermann, K. F., 1995. "Evaluating reported determinants of labour demand," Labour Economics, Elsevier, vol. 2(1), pages 102-102, March.
    12. Lone Engbo Christiansen, 2008. "Do Technology Shocks Lead to Productivity Slowdowns? Evidence from Patent Data," IMF Working Papers 08/24, International Monetary Fund.
    13. Patrick Francois & Huw Lloyd-Ellis, 2006. "Intrinsic Business Cycles with Pro-Cyclical R&D," Working Papers 1102, Queen's University, Department of Economics.
    14. Lawrence J. Christiano & Martin Eichenbaum & Robert J. Vigfusson, 2003. "What happens after a technology shock?," International Finance Discussion Papers 768, Board of Governors of the Federal Reserve System (U.S.).
    15. Yorukoglu, Mehmet, 2000. "Product vs. process innovations and economic fluctuations," Carnegie-Rochester Conference Series on Public Policy, Elsevier, pages 137-163.
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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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