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Read All About it: What happens following a technology shock

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  • Michelle Alexopoulos

Abstract

For decades economists have searched for the sources of business cycle fluctuations. Early business cycle research focused on leading and lagging indicators and, while many of these are still employed today, they fail to provide insight into the sources of the fluctuations. Despite recent advances in economic modeling, there is still much debate as to the cause of recessions and expansions. In standard real business cycle models, a large component of the fluctuations is attributable to technology shocks. Unfortunately, technology and technology shocks are notoriously difficult to measure. To identify the responses of the economy to a technology shock, I use new data from Bowker’s Publications that documents the change in the number of new titles in technology that were available for purchase in the American economy from major publishers. My findings indicate that, in response to a positive technology shock, employment, total factor productivity and capital all significantly increase. Although my findings are different from those in other recent studies, they are consistent with the predictions of standard real business cycle models.

Suggested Citation

  • Michelle Alexopoulos, 2004. "Read All About it: What happens following a technology shock," 2004 Meeting Papers 56, Society for Economic Dynamics.
  • Handle: RePEc:red:sed004:56
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    References listed on IDEAS

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    1. Miles S. Kimball & John G. Fernald & Susanto Basu, 2006. "Are Technology Improvements Contractionary?," American Economic Review, American Economic Association, vol. 96(5), pages 1418-1448, December.
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    7. 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.
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    9. Yorukoglu, Mehmet, 2000. "Product vs. process innovations and economic fluctuations," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 52(1), pages 137-163, June.
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    12. Lawrence J. Christiano & Martin Eichenbaum & Robert Vigfusson, 2003. "What Happens After a Technology Shock?," NBER Working Papers 9819, National Bureau of Economic Research, Inc.
    13. Lone Engbo Christiansen, 2008. "Do Technology Shocks Lead to Productivity Slowdowns? Evidence from Patent Data," IMF Working Papers 08/24, International Monetary Fund.
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    More about this item

    Keywords

    Macroeconomics; Technology Shocks;

    JEL classification:

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

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