Is the technology-driven real business cycle hypothesis dead?
By: Neville Francis, Valerie A. Ramey.
Contributors: Ramey, Valerie A.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper  8726; Working paper series (National Bureau of Economic Research : Online) ;; working paper no.  8726.
Publisher: National Bureau of Economic Research
Published: 2002
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Galí, Jordi, 1961-; Technological innovations -- Econometric models.; Business cycles -- Econometric models.
Description: "In this paper, we re-examine the recent evidence that technology shocks do not produce business cycle patterns in the data.  We first extend Gali'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 GalŁ'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"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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