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The Effects of Technology Shocks on Hours and Output: A Robustness Analysis

  • Canova, Fabio
  • López-Salido, J David
  • Michelacci, Claudio

We analyze the effects of neutral and investment-specific technology shocks on hours and output. Long cycles in hours are captured in a variety of ways. Hours robustly fall in response to neutral shocks and robustly increase in response to investment specific shocks. The percentage of the variance of hours (output) explained by neutral shocks is small (large); the opposite is true for investment specific shocks. `News shocks' that generically change expectations about future productivity, are uncorrelated with the estimated technology shocks.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6720.

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Date of creation: Feb 2008
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Handle: RePEc:cpr:ceprdp:6720
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