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Read All About it: What happens following a technology shock

  • Michelle Alexopoulos

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.

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Paper provided by Society for Economic Dynamics in its series 2004 Meeting Papers with number 56.

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Date of creation: 2004
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Handle: RePEc:red:sed004:56
Contact details of provider: Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Fax: 1-314-444-8731
Web page: http://www.EconomicDynamics.org/society.htm
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  1. Beaudry, Paul & Portier, Franck, 2003. "Stock Prices, News and Economic Fluctuations," IDEI Working Papers 158, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Daniel Wilson, 2004. "IT and beyond: the contribution of heterogeneous capital to productivity," Working Paper Series 2004-13, Federal Reserve Bank of San Francisco.
  3. Jordi Galí & Pau Rabanal, 2004. "Technology Shocks and Aggregate Fluctuations; How Well Does the RBC Model Fit Postwar U.S. Data?," IMF Working Papers 04/234, International Monetary Fund.
  4. Lawrence J. Christiano & Martin Eichenbaum & Robert Vigfusson, 2003. "What happens after a technology shock?," International Finance Discussion Papers 768, Board of Governors of the Federal Reserve System (U.S.).
  5. Lone Engbo Christiansen, 2008. "Do Technology Shocks Lead to Productivity Slowdowns? Evidence From Patent Data," IMF Working Papers 08/24, International Monetary Fund.
  6. Michelle Alexopoulos & Jon Cohen, 2010. "Volumes of Evidence - Examining Technical Change Last Century Through a New Lens," Working Papers tecipa-392, University of Toronto, Department of Economics.
  7. Patrick Francois & Huw Lloyd-Ellis, 2006. "Intrinsic Business Cycles with Pro-Cyclical R&D," Working Papers 1102, Queen's University, Department of Economics.
  8. Ross, David R. & Zimmermann, Klaus F., 1993. "Evaluating reported determinants of labor demand," Labour Economics, Elsevier, vol. 1(1), pages 71-84, June.
  9. 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.
  10. Jordi Gali & Luca Gambetti, 2008. "On the Sources of the Great Moderation," NBER Working Papers 14171, National Bureau of Economic Research, Inc.
  11. 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.
  12. John Shea, 1998. "What Do Technology Shocks Do?," NBER Working Papers 6632, National Bureau of Economic Research, Inc.
  13. Victor Zarnowitz, 1992. "Business Cycles: Theory, History, Indicators, and Forecasting," NBER Books, National Bureau of Economic Research, Inc, number zarn92-1, 07.
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  1. Read All about It!! What Happens Following a Technology Shock? (AER 2011) in ReplicationWiki

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