On the Robust Effects of Technology Shocks on Hours Worked and Output
Universitat Pompeu Fabra - Department of Economics and Business (DEB); European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); University of Southampton - Division of Economics; Centre for Economic Policy Research (CEPR)
J. David Lopez-Salido
Bank of Spain - Research Department; Centre for Economic Policy Research (CEPR)
Centre for Monetary and Financial Studies (CEMFI); Centre for Economic Policy Research (CEPR)
We analyze the effects of neutral and investment-specific technology shocks on hours worked and output. Low frequency movements 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 and other shocks are uncorrelated with the estimated neutral and investment specific shocks.
Number of Pages in PDF File: 29
Keywords: Technology disturbances, structural VARs, low frequency movements, news shocks
JEL Classification: E00, J60, O33
Date posted: July 25, 2007
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