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Measures of Technology and the Short-Run Responses to Technology Shocks - Is the RBC-Model Consistent with Swedish Manufacturing Data?

  • Carlsson, M.

This paper estimates technology growth using several variants of the Hall (1988, 1990) method on data for Swedish two-digit manufacturing industries. More specifically, I first apply and evaluate two different approaches to control for varying factor utilization developed by Basu et al. (1998) and Burnside et al. (1995). Second, I propose a generalization of the latter specification. Finally, the cyclical behavior of the resulting technology measure is studied and the responses of hours and output to a technology shock are estimated using a variant of the standard VAR-approach. The main finding is that a positive technology shock has, on impact, a contractionary effect on hours and non-expansionary effect on output. This finding is inconsistent with the predictions of the standard real business cycle model.

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Paper provided by Uppsala - Working Paper Series in its series Papers with number 2000-20.

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Length: 62 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:fth:uppaal:2000-20
Contact details of provider: Postal:
UPPSALA UNIVERSITY, DEPARTMENT OF ECONOMICS, S-751 20 UPPSALA SWEDEN.

Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
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  1. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
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  12. Burnside, Craig, 1996. "Production function regressions, returns to scale, and externalities," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 177-201, April.
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  14. Lawrence J. Christiano & Martin Eichenbaum & Charles Evans, 1994. "The effects of monetary policy shocks: evidence from the Flow of Funds," Working Paper Series, Macroeconomic Issues 94-2, Federal Reserve Bank of Chicago.
  15. Nelson, C. & Startz, R., 1988. "The Distribution Of The Instrumental Variables Estimator And Its T-Ratio When The Instrument Is A Poor One," Working Papers 88-07, University of Washington, Department of Economics.
  16. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 33(1), pages 125-132.
  17. Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 1995. "Capital Utilization and Returns to Scale," NBER Chapters, in: NBER Macroeconomics Annual 1995, Volume 10, pages 67-124 National Bureau of Economic Research, Inc.
  18. Susanto Basu & John G. Fernald, 1996. "Returns to scale in U.S. production: estimates and implications," International Finance Discussion Papers 546, Board of Governors of the Federal Reserve System (U.S.).
  19. Susanto Basu & Miles S. Kimball, 1997. "Cyclical Productivity with Unobserved Input Variation," NBER Working Papers 5915, National Bureau of Economic Research, Inc.
  20. Hall, Alastair R & Rudebusch, Glenn D & Wilcox, David W, 1996. "Judging Instrument Relevance in Instrumental Variables Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 283-98, May.
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  22. Dufwenberg, Martin & Koskenkylä, Heikki & Södersten, Jan, 1994. "Manufacturing investment and taxation in the Nordic countries," Research Discussion Papers 8/1994, Bank of Finland.
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  24. Dufwenberg, Martin & Koskenkyla, Heikki & Sodersten, Jan, 1994. " Manufacturing Investment and Taxation in the Nordic Countries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(3), pages 443-61.
  25. Lilien, David M, 1982. "Sectoral Shifts and Cyclical Unemployment," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 777-93, August.
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  27. Ohlsson, Henry & Vredin, Anders, 1994. "Political Cycles and Cyclical Policies. A New Test Approach Using Fiscal Forecasts," SSE/EFI Working Paper Series in Economics and Finance 9, Stockholm School of Economics.
  28. Runkle, David E, 1987. "Vector Autoregressions and Reality," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(4), pages 437-42, October.
  29. Anxo, Dominique & Sterner, Thomas, 1994. "Using electricity data to measure capital utilization," Energy Economics, Elsevier, vol. 16(1), pages 63-74, January.
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  31. Wilson, Daniel J., 2000. "Estimating Returns to Scale: Lo, Still No Balance," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 285-314, April.
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