EconPapers    
Economics at your fingertips  
 

What Do Technology Shocks Do?

John Shea ()

No 6632, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The real business cycle literature has largely ignored the empirical question of what role technology shocks actually play in business cycles. The observed procyclicality of total factor productivity (TFP) does not prove that technology shocks are important to business cycles, since demand shocks could generate procyclical TFP due to increasing returns or other reasons. I address the role of technology by investigating the dynamic interactions of inputs, TFP and two observable indicators of technology shocks: R+D spending and patent applications. Using annual panel data on 19 US manufacturing industries from 1959 -1991, I find that favorable R+D or patent shocks tend to increase inputs, especially labor, in the short run, but to decrease inputs in the long run, while tilting the mix of inputs towards capital and nonproduction labor. Favorable technology shocks do not significantly increase measured TFP at any horizon, except for a subset of industries dominated by process innovations, suggesting that available price data do not capture productivity improvements due to product innovations. Technology shocks explain only a small fraction of input and TFP volatility at business cycle horizons.

JEL-codes: E32 O33 (search for similar items in EconPapers)
Date: 1998-07
New Economics Papers: this item is included in nep-tid
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (67) Track citations by RSS feed

Published as NBER Macro Annual 1998, Bernanke, Ben and Julio Rotemberg, eds., Cambridge: MIT Press, pp. 275-310.
Published as What Do Technology Shocks Do? , John Shea. in NBER Macroeconomics Annual 1998, volume 13 , Bernanke and Rotemberg. 1999

Downloads: (external link)
http://www.nber.org/papers/w6632.pdf (application/pdf)

Related works:
Chapter: What Do Technology Shocks Do? (1999) 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:nbr:nberwo:6632

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w6632

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2020-10-24
Handle: RePEc:nbr:nberwo:6632