Working Paper: NBER ID: w9819
Authors: Lawrence J. Christiano; Martin Eichenbaum; Robert Vigfusson
Abstract: We provide empirical evidence that a positive shock to technology drives per capita hours worked, consumption, investment, average productivity and output up. This evidence contrasts sharply with the results reported in a large and growing literature that argues, on the basis of aggregate data, that per capita hours worked fall after a positive technology shock. We argue that the difference in results primarily reflects specification error in the way that the literature models the low-frequency component of hours worked.
Keywords: technology shock; hours worked; business cycle
JEL Codes: C1; E3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Positive technology shock (O49) | Hours worked (J22) |
| Positive technology shock (O49) | Output (Y10) |
| Positive technology shock (O49) | Average productivity (O49) |
| Positive technology shock (O49) | Consumption (E21) |
| Positive technology shock (O49) | Investment (G31) |
| Positive technology shock (O49) | Long-term output (E23) |
| Hours worked (J22) | Output (Y10) |