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International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page How do Canadian Hours Worked Respond to a Technology Shock?
Lawrence J Christiano; Martin Eichenbaum; Robert Vigfusson
2003-774  (September 2003)

Abstract:  This paper investigates the response of hours worked to a permanent technology shock. Based on annual data from Canada, we argue that hours worked rise after a positive technology shock. We obtain a similar result using annual data from the United States. These results contradict a large literature that claims that a positive technology shock causes hours worked to fall. We find that the different results are due to the literature making a specification error in the statistical model of per capital hours worked. Finally, we present results that Canadian monetary policy has accommodated technology shocks.

Full paper (292 KB PDF)

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

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