Are technology improvements contractionary?
By: Susanto Basu, John Fernald, Miles Kimball.
Contributors: Fernald, John G.; Kimball, Miles S.
Series: Working paper series ;; WP-2004-20; Working paper series (Federal Reserve Bank of Chicago. Research Dept. : Online) ;; WP-2004-20.
Publisher: Federal Reserve Bank of Chicago
Published: 2004
Place of publication: [Chicago, Ill.]
Language: eng
Format: Electronic resource
Subjects: Technological innovations -- Economic aspects -- Mathematical models; Diffusion of innovation -- Effect of technological innovations on -- Mathematical models
Description: "Yes.  We construct a measure of aggregate technology change, controlling for varying utilization of capital and labor, non-constant returns and imperfect competition, and aggregation effects.  On impact, when technology improves, input use and non-residential investment fall sharply.  Output changes little.  With a lag of several years, inputs and investment return to normal and output rises strongly.  We discuss what models could be consistent with this evidence.  For example, standard onesector real- business-cycle models are not, since they generally predict that technology improvements are expansionary, with inputs and (especially) output rising immediately.  However, the evidence is consistent with simple sticky-price models, which predict the results we find: When technology improves, input use and investment demand generally fall in the short run, and output itself may also fall"--Federal Reserve Bank of Chicago web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 12/17/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.