What Happens after a Technology Shock?

54 Pages Posted: 18 Aug 2003

See all articles by Lawrence J. Christiano

Lawrence J. Christiano

Northwestern University; Federal Reserve Bank of Cleveland; Federal Reserve Bank of Chicago; Federal Reserve Bank of Minneapolis; National Bureau of Economic Research (NBER)

Martin Eichenbaum

Northwestern University; National Bureau of Economic Research (NBER)

Robert J. Vigfusson

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: June 2003

Abstract

We provide empirical evidence that a positive shock to technology drives up per capita hours worked, consumption, investment, average productivity and output. This evidence contrasts sharply with the results reported in a large and growing literature that argues, on the basis of aggregate data, that per capita hours worked fall after a positive technology shock. We argue that the difference in results primarily reflects specification error in the way that the literature models the low-frequency component of hours worked.

Keywords: productivity, long-run restriction, hours worked, weak instruments

JEL Classification: E32, E24

Suggested Citation

Christiano, Lawrence J. and Eichenbaum, Martin and Vigfusson, Robert John, What Happens after a Technology Shock? (June 2003). Available at SSRN: https://ssrn.com/abstract=425004 or http://dx.doi.org/10.2139/ssrn.425004

Lawrence J. Christiano

Northwestern University ( email )

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Federal Reserve Bank of Chicago

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Federal Reserve Bank of Minneapolis

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National Bureau of Economic Research (NBER)

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Martin Eichenbaum

Northwestern University ( email )

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847-491-7001 (Fax)

National Bureau of Economic Research (NBER)

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Robert John Vigfusson (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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