scholarly journals ON THE EFFECTS OF TECHNOLOGY SHOCKS OVER LABOR INPUT AT BUSINESS-CYCLE FREQUENCIES: AN EMPIRICAL NOTE

2013 ◽  
Vol 31 (60) ◽  
Author(s):  
Matheus Albergaria de Magalhães ◽  
Paulo Picchetti
Keyword(s):  
Business Cycle ◽  
Growth Rates ◽  
Data Sources ◽  
Real Business Cycle ◽  
Technology Shocks ◽  
Labor Input ◽  
Dynamic Pattern ◽  
Heated Debate ◽  
Empirical Note ◽  
Rbc Models

In the last years, there has been a heated debate over the empirical adequacy of Real-Business-Cycle (RBC) models (GALÍ, 1999; CHRISTIANO; EICHENBAUM; VIGFUSSON, 2003; FRANCIS; RAMEY, 2005). In this empirical note, we check the robustness of some of the main results obtained in this strand of the literature. Our contribution is twofold: first, we provide robust results by using different data sources; second, we show that the results related to labor input’s dynamic pattern over business-cycle horizons are sensitive to the way labor input is modelled. The results obtained favor specifications where labor input is modelled as growth rates. These results may help distinguishing the most desirable empirical specifications to be employed over the debate in the future.

Technology Shocks and the Great Depression

2016 ◽  
Vol 76 (3) ◽  
pp. 909-933 ◽  
Author(s):  
Shingo Watanabe
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Great Depression ◽  
Imperfect Competition ◽  
Real Business Cycle ◽  
Technology Shocks ◽  
The Great Depression ◽  
Large Fluctuations ◽  
Technology Growth

Standard productivity measures indicate large fluctuations in technology during the Great Depression. This article's historical technology series (1892–1966), controlled for aggregation effects, varying input utilization, non-constant returns, and imperfect competition, does not indicate technology regress such that could trigger the downturn. In contrast, technology improvements in the recovery were so rapid that, over the whole Great Depression period, technology growth was highest among pre-WWII decades. This article also finds that output changed little and inputs fell when technology improved in the pre-WWII period. Real-business-cycle models have difficulty in explaining pre-WWII business cycles characterized by such responses.

scholarly journals Did Technology Shocks Drive the Great Depression? Explaining Cyclical Productivity Movements in U.S. Manufacturing, 1919–1939

2011 ◽  
Vol 71 (4) ◽  
pp. 827-858 ◽  
Author(s):  
ROBERT INKLAAR ◽  
HERMAN DE JONG ◽  
REITZE GOUMA
Keyword(s):  
Business Cycle ◽  
Great Depression ◽  
Returns To Scale ◽  
The United States ◽  
Increasing Returns ◽  
Real Business Cycle ◽  
Technology Shocks ◽  
Business Cycle Theory ◽  
Increasing Returns To Scale ◽  
The Great Depression

Technology shocks and declining productivity have been advanced as important factors driving the Great Depression in the United States, based on real business cycle theory. We estimate an improved measure of technology for interwar manufacturing, using data from the U.S. census reports. There is clear evidence of increasing returns to scale and we find no statistical proof that technology shocks led to changes in hours worked or other inputs. This contradicts a key prediction of real business cycle theory. We find that increasing returns to scale are not due to market power but to labor and capital hoarding.

scholarly journals Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?

1999 ◽  
Vol 89 (1) ◽  
pp. 249-271 ◽  
Author(s):  
Jordi Galí
Keyword(s):  
Simple Model ◽  
Business Cycles ◽  
Business Cycle ◽  
Monopolistic Competition ◽  
Real Business Cycle ◽  
Technology Shocks ◽  
Aggregate Fluctuations ◽  
G7 Countries ◽  
Technology Shock ◽  
The Business Cycle

I estimate a decomposition of productivity and hours into technology and non-technology components. Two results stand out: (a) the estimated conditional correlations of hours and productivity are negative for technology shocks, positive for nontechnology shocks; (b) hours show a persistent decline in response to a positive technology shock. Most of the results hold for a variety of model specifications, and for the majority of G7 countries. The picture that emerges is hard to reconcile with a conventional real-business-cycle interpretation of business cycles, but is shown to be consistent with a simple model with monopolistic competition and sticky prices. (JEL E32, E24)

scholarly journals PROCYCLICAL SOLOW RESIDUALS WITHOUT TECHNOLOGY SHOCKS

2009 ◽  
Vol 13 (3) ◽  
pp. 366-389 ◽  
Author(s):  
Andrew J. Clarke ◽  
Alok Johri
Keyword(s):  
Standard Deviation ◽  
Business Cycle ◽  
Total Factor Productivity ◽  
Learning By Doing ◽  
Real Business Cycle ◽  
Technology Shocks ◽  
Factor Productivity ◽  
Hard Time ◽  
Second Moments ◽  
Key Innovation

Most real business cycle models have a hard time jointly explaining the twin facts of strongly procyclical Solow residuals and extremely low correlations between wages and hours. We present a model that delivers both these results without using exogenous variation in total factor productivity (technology shocks). The key innovation of the paper is to add learning-by-doing to firms' technology. As a result, firms optimally vary their prices to control the amount of learning, which in turn influences future productivity. We show that exogenous variation in labor wedges (preference shocks) measured from aggregate data deliver around 50% of the standard deviation in the efficiency wedge (Solow residual) as well as realistic second moments for key aggregate variables, which is in sharp contrast to the model without learning-by-doing.

A Skeptical Note on the Importance of Technology Shocks

1998 ◽  
Vol 42 (1) ◽  
pp. 108-111
Author(s):  
James E. Hartley
Keyword(s):  
Business Cycle ◽  
Real Business Cycle ◽  
Technology Shocks ◽  
Cycle Model ◽  
Depreciation Rate ◽  
Business Cycle Model ◽  
Real Business Cycle Model

This paper tests whether a real business cycle model can be built using a specific technological shock, a change in the depreciation rate, instead of an aggregate multiplicative shock. The model cannot duplicate standard business cycle facts.

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