Technology Shock and Employment: Do We Really Need DSGE Models with a Fall in Hours?

Martial Dupaigne, P. F ve and Julien Matheron
Authors registered in the RePEc Author Service: Patrick Fève

Working papers from Banque de France

Abstract: The recent empirical literature that uses Structural Vector Autoregressions (SVAR) has shown that productivity shocks identified using long--run restrictions lead to a persistent and significant decline in hours worked. This evidence calls into question standard RBC models in which a positive technology shock leads to a rise in hours. In this paper, we estimate and test a standard RBC model using Indirect Inference on impulse responses of hours worked after technology and non-technology shocks. We find that this model is not rejected by the data and is able to produce impulse responses in SVAR from simulated data similar to impulse responses in SVAR from actual data. Moreover, technology shocks represent the main contribution to the variance of the business cycle component of output under the estimated DSGE model. Our results suggest that we do not necessarily need DSGE models with a fall in hours to reproduce the results deriving from SVAR models.

Keywords: SVARs; Long--Run Restrictions; RBC models; Indirect Inference (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Technology Shocks and Employment: Do We Really Need DSGE Models with a Fall in Hours? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:124

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