Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?

Jordi Galí

American Economic Review, 1999, vol. 89, issue 1, 249-271

Abstract: The author estimate a decomposition of productivity and hours into technology and nontechnology components. Two results stand out: (1) the estimated conditional correlations of hours and productivity are negative for technology shocks, positive for nontechnology shocks; and (2) hours show a persistent decline in response to a positive technology shock. Most of the results hold for a variety of model specifications and for the majority of G7 countries. The picture that emerges is hard to reconcile with a conventional real-business-cycle interpretation of business cycles but is shown to be consistent with a simple model with monopolistic competition and sticky prices.

JEL-codes: E32 O33 (search for similar items in EconPapers)
Date: 1999
Note: DOI: 10.1257/aer.89.1.249
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Citations: View citations in EconPapers (633)

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Related works:
Working Paper: Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations? (1996)
Working Paper: Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations? (1996)
Working Paper: Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations (1996)
Software Item: RATS programs to replicates Gali's AEA 1999 VAR results
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