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International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page What Happens After A Technology Shock?
Lawrence J. Christiano; Martin Eichenbaum; Robert Vigfusson
2003-768  (July 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.

Full paper (1178 KB PDF)

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

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Last update: July 14, 2003