Do SVAR Models Justify Discarding the Technology Shock-Driven Real Business Cycle Hypothesis?

Hyeon-seung Huh and David Kim

No 2013rwp-59, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: This paper investigates the validity of technology shocks as a driving force of U.S. business cycle fluctuations. Using three well-known structural vector autoregression (SVAR) models, we analyze how structural shocks are associated with the variations of output and hours worked at business cycle frequencies. Empirical results reveal that technology shocks remain an important source of cyclical movements in output. Furthermore, a positive technology shock does not lead to a decline in hours worked in contrast to previous studies. Our SVARbased evidence does not support discarding a technology shock-driven business cycle theory.

Keywords: Structural vector autoregression; Technology shocks; Demand shocks; Real business cycles (search for similar items in EconPapers)
JEL-codes: C32 E32 (search for similar items in EconPapers)
Pages: 33pages
Date: 2013-12
New Economics Papers: this item is included in nep-dge
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Journal Article: Do SVAR Models Justify Discarding the Technology-Shock-Driven Real Business Cycle Hypothesis? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:yon:wpaper:2013rwp-59

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