Technology Diffusion and Business Cycle Asymmetry

Toshiya Ishikawa

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: The goal of this paper is to theoretically account for business cycle asymmetries of deepness and steepness. The former means that recessions are deeper than expansions are tall, and the latter that recessions are steeper than expansions. In this paper I introduce the process of technology diffusion and learning like general purpose technology in the framework of real business cycles. I assume that a positive technology shock diffuses over the economy with some time lag, while a negative one does without any lag. Generally, a positive shock can be literally interpreted as an innovation to technology. Economic agents may take some time to adopt a new technology and learn how to use the technology efficiently. In contrast, a negative shock can immediately decrease the level or growth of productivity. No learning is needed to suffer a loss of productivity induced by a negative shock. A positive shock makes the near-future level of productivity higher than the present level as a result of technology diffusion. Because of intertemporal substitution behavior, it leads to a recession in the present and then the subsequent expansion. In contrast, a negative innovation is assumed to immediately generate a recession. When an S-shaped diffusion is assumed, a positive shock can induce a deeper and steeper recession. This gives a theoretical explanation of deepness and steepness asymmetries.

Keywords: Keywords: Technology Diffusion; Intertemporal Substitution; Real Business Cycles. (search for similar items in EconPapers)
JEL-codes: E32 E37 O33 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2004-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://degit.sam.sdu.dk/papers/degit_09/C009_016.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to degit.sam.sdu.dk:80 (No such host is known. )

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c009_016

Access Statistics for this paper

More papers in DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade Contact information at EDIRC.
Bibliographic data for series maintained by Jan Pedersen ().