Working Paper Series, Department of Economics, Uppsala University
No 2002:10:
Measures of Technology and the Business Cycle
Annika Alexius and Mikael Carlsson
Abstract: Empirical evidence on the relationship between technology
shocks and e.g. hours worked hinges crucially on the identification of the
unobservable technological progress. In this paper, we study different
measures of technology in order to find out (i) to what extent they capture
the same underlying phenomenon and (ii) whether the implications for
macroeconomic theory are robust across the approaches. Several versions of
the productions function approach and structural VAR models are
investigated. Our main finding is that the different technology measures
are highly correlated. However, the exact formulation of the identifying
restrictions seems to matter for the results. While we replicate the
standard finding of a strongly procyclical Solow residual, all other
measures of technology are either acyclical or countercyclical.
Keywords: Technology shocks; productions function approach; strcture VAR models; (follow links to similar papers)
JEL-Codes: C32; E32; (follow links to similar papers)
38 pages, May 7, 2002, Revised March 2, 2006
Revised version of the second half of the paper.
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- This paper is published as:
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Alexius, Annika and Mikael Carlsson, (2005), 'Measures of Technology and the Business Cycle', Review of Economics and Statistics, Vol. 87, No. 2, pages 299-307
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