Are Technology Improvements Contractionary? Journal Article uri icon

Overview

abstract

  • Yes. We construct a measure of aggregate technology change, controlling for aggregation effects, varying utilization of capital and labor, nonconstant returns, and imperfect competition. On impact, when technology improves, input use and nonresidential investment fall sharply. Output changes little. With a lag of several years, inputs and investment return to normal and output rises strongly. The standard one-sector real-business-cycle model is not consistent with this evidence. The evidence is consistent, however, with simple sticky-price models, which predict the results we find: when technology improves, inputs and investment generally fall in the short run, and output itself may also fall.

publication date

  • November 1, 2006

Date in CU Experts

  • March 12, 2017 3:13 AM

Full Author List

  • Basu S; Fernald JG; Kimball MS

author count

  • 3

Other Profiles

International Standard Serial Number (ISSN)

  • 0002-8282

Additional Document Info

start page

  • 1418

end page

  • 1448

volume

  • 96

issue

  • 5