Is the technology-driven real business cycle hypothesis dead? Shocks and aggregate fluctuations revisited (2001)
BibTeX
@MISC{A01isthe,
author = {Neville Francis A and Valerie A. Ramey B and Garey Ramey and Matthew Shapiro and Harald Uhlig and Jordi Galí},
title = {Is the technology-driven real business cycle hypothesis dead? Shocks and aggregate fluctuations revisited},
year = {2001}
}
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Abstract
This paper re-examines recent empirical evidence that positive technology shocks lead to shortrun declines in hours. Building on Galí’s (1999) work, which uses long-run restrictions to identify technology shocks, we analyze whether the identified shocks can be plausibly interpreted as technology shocks. We first examine the validity of the identification assumption in a DGE model with several possible sources of permanent shocks. We then empirically assess the plausibility of the shocks using a variety of tests. After finding that the shocks pass all of the tests, we present two examples of modified DGE models that match the facts.
