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DO TECHNOLOGY SHOCKS DRIVE HOURS UP OR DOWN? A LITTLE EVIDENCE FROM AN AGNOSTIC PROCEDURE

Published online by Cambridge University Press:  25 October 2005

ELENA PESAVENTO  and
BARBARA ROSSI
ELENA PESAVENTO
Affiliation:
Emory University
BARBARA ROSSI
Affiliation:
Duke University
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Abstract

This paper analyzes the robustness of the estimate of a positive productivity shock on hours to the presence of a possible unit root in hours. Estimations in levels or in first differences provide opposite conclusions. We rely on an agnostic procedure in which the researcher does not have to choose between a specification in levels or in first differences. We find that a positive productivity shock has a negative impact effect on hours, but the effect is much shorter lived, and disappears after two quarters. The effect becomes positive at business-cycle frequencies, although it is not significant.

Keywords

Technology ShocksPositive ProductivityHours Worked
Type
ARTICLES
Information
Macroeconomic Dynamics , Volume 9 , Issue 4 , September 2005 , pp. 478 - 488
Copyright
© 2005 Cambridge University Press

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