EconPapers    
Economics at your fingertips  
 

Are technology improvements contractionary?

Susanto Basu, John Fernald () and Miles Kimball

No WP-04-20, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: Yes. We construct a measure of aggregate technology change, controlling for varying utilization of capital and labor, non- constant returns and imperfect competition, and aggregation effects. On impact, when technology improves, input use and non- residential investment fall sharply. Output changes little. With a lag of several years, inputs and investment return to normal and output rises strongly. We discuss what models could be consistent with this evidence. For example, standard one-sector real-business-cycle models are not, since they generally predict that technology improvements are expansionary, with inputs and (especially) output rising immediately. However, the evidence is consistent with simple sticky-price models, which predict the results we find: When technology improves, input use and investment demand generally fall in the short run, and output itself may also fall.

Keywords: Technology; -; Economic; aspects (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (81)

Downloads: (external link)
http://www.chicagofed.org/digital_assets/publicati ... s/2004/wp2004_20.pdf (application/pdf)

Related works:
Journal Article: Are Technology Improvements Contractionary? (2006) Downloads
Working Paper: Are Technology Improvements Contractionary? (2004) Downloads
Working Paper: Are Technology Improvements Contractionary? (2002) Downloads
Working Paper: Are technology improvements contractionary? (1998) Downloads
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:fip:fedhwp:wp-04-20

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Lauren Wiese ().

 
Page updated 2025-04-01
Handle: RePEc:fip:fedhwp:wp-04-20