Title: Are technology improvements contractionary?
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.
Subjects: Diffusion of Innovation, Economic aspects, Economic aspects of Technological innovations, Economic aspects of Technology, Effect of technological innovations on, Input-output analysis, Investments, Mathematical models, Technological innovations, Technology, Diffusion of innovations