Technology Shocks and Aggregate Fluctuations: How Well Does the RBC Model Fit Postwar U.S. Data?

December 1, 2004

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Our answer: Not so well. We reached that conclusion after reviewing recent research on the role of technology as a source of economic fluctuations. The bulk of the evidence suggests a limited role for aggregate technology shocks, pointing instead to demand factors as the main force behind the strong positive comovement between output and labor input measures.

Subject: Business cycles, Economic growth, Labor, Labor productivity, Prices, Production, Sticky prices, Technology

Keywords: business cycle, business cycle fluctuation, business cycle model, Business cycles, Labor productivity, monetary policy, Nominal Rigidities, point estimate, positive correlation, production function, RBC literature, RBC model, Real Business Cycles, Real Frictions, real wage, standard deviation, Sticky prices, technology shock, Technology Shocks, time series, WP

Pages:
67
Volume:
2004
DOI:
https://doi.org/10.5089/9781451875652.001
Issue:
234
Series:
Working Paper No. 2004/234
Stock No:
WPIEA2342004
ISBN:
9781451875652
ISSN:
1018-5941

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