Is the Technology-Driven Real Business Cycle Hypothesis Dead?

Neville Francis and Valerie Ramey

No 8726, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper, we re-examine the recent evidence that technology shocks do not produce business cycle patterns in the data. We first extend Gal¡'s (1999) work, which uses long-run restrictions to identify technology shocks, by examining whether the identified shocks can be plausibly interpreted as technology shocks. We do this in three ways. First, we derive additional long-run restrictions and use them as tests of overidentification. Second, we compare the qualitative implications from the model with the impulse responses of variables such as wages and consumption. Third, we test whether some standard 'exogenous' variables predict the shock variables. We find that oil shocks, military build-ups, and Romer dates do not predict the shock labeled 'technology.' We then show ways in which a standard DGE model can be modified to fit Gal¡'s finding that a positive technology shock leads to lower labor input. Finally, we re-examine the properties of the other key shock to the system.

JEL-codes: E3 (search for similar items in EconPapers)
Date: 2002-01
New Economics Papers: this item is included in nep-dge and nep-ino
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (134)

Published as Francis, Neville and Valerie A. Ramey. "Is The Technology-Driven Real Business Cycle Hypothesis Dead? Shocks And Aggregate Fluctuations Revisited," Journal of Monetary Economics, 2005, v52(8,Nov), 1379-1399.

Downloads: (external link)
http://www.nber.org/papers/w8726.pdf (application/pdf)

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:nbr:nberwo:8726

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w8726

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 ().