The Effects of Technology Shocks on Hours and Output: A Robustness Analysis

Canova, Fabio; Lopez-Salido, David; Michelacci, Claudio

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The Effects of Technology Shocks on Hours and Output: A Robustness Analysis

CEPR Discussion Paper No. DP6720

32 Pages Posted: 11 Jun 2008

See all articles by Fabio Canova

David Lopez-Salido

Board of Governors of the Federal Reserve System

Claudio Michelacci

Centre for Monetary and Financial Studies (CEMFI); Centre for Economic Policy Research (CEPR)

Date Written: February 2008

Abstract

We analyze the effects of neutral and investment-specific technology shocks on hours and output. Long cycles 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' that generically change expectations about future productivity, are uncorrelated with the estimated technology shocks.

Keywords: Long cycles, News shocks, Structural VARs, Technology disturbances

JEL Classification: E00, J60, O33

Suggested Citation: Suggested Citation

Canova, Fabio and Lopez-Salido, David and Michelacci, Claudio, The Effects of Technology Shocks on Hours and Output: A Robustness Analysis (February 2008). CEPR Discussion Paper No. DP6720, Available at SSRN: https://ssrn.com/abstract=1141626