Working Paper: CEPR ID: DP4522
Authors: Jordi Gal; Pau Rabanal
Abstract: Our answer: not so well. We reach that conclusion after reviewing recent research on the role of technology as a source of economic fluctuations. The bulk of the evidence suggests a limited role for aggregate technology shocks, pointing instead to demand factors as the main force behind the strong positive co-movement between output and labor input measures.
Keywords: Nominal rigidities; Real business cycles; Real frictions; Technology shocks
JEL Codes: E32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| positive technology shocks (O49) | decline in hours worked (J22) |
| technology shocks (D89) | labor productivity (J24) |
| technology shocks (D89) | hours worked (J22) |
| transitory shocks (E32) | hours worked (J22) |
| transitory shocks (E32) | output (C67) |
| technology shocks (D89) | correlation between output and hours (E23) |
| transitory shocks (E32) | correlation between output and hours (E23) |