Measures of Technology and the Business Cycle

Annika Alexius () and Mikael Carlsson ()

No 2002:10, Working Paper Series from Uppsala University, Department of Economics

Abstract: Empirical evidence on the relationship between technology shocks and e.g. hours worked hinges crucially on the identification of the unobservable technological progress. In this paper, we study different measures of technology in order to find out (i) to what extent they capture the same underlying phenomenon and (ii) whether the implications for macroeconomic theory are robust across the approaches. Several versions of the productions function approach and structural VAR models are investigated. Our main finding is that the different technology measures are highly correlated. However, the exact formulation of the identifying restrictions seems to matter for the results. While we replicate the standard finding of a strongly procyclical Solow residual, all other measures of technology are either acyclical or countercyclical.

Keywords: Technology shocks; productions function approach; strcture VAR models (search for similar items in EconPapers)
JEL-codes: C32 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: 2002-05-07, Revised 2006-03-02
Note: Revised version of the second half of the paper.
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Published in Review of Economics and Statistics, 2005, pages 299-307.

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http://www.nek.uu.se//Pdf/wp2002_10r.pdf Revised Working paper (application/pdf)

Related works:
Journal Article: Measures of Technology and the Business Cycle (2005)
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