What Do Technology Shocks Do?

  title={What Do Technology Shocks Do?},
  author={John Shea},
  journal={NBER Macroeconomics Annual},
  pages={275 - 310}
  • J. Shea
  • Published 1 January 1998
  • Economics
  • NBER Macroeconomics Annual
The real-business-cycle literature has largely ignored the empirical question of what role technology shocks actually play in business cycles. The observed procyclicality of total factor productivity (TFP) does not prove that technology shocks are important to business cycles, since demand shocks could generate procyclical TFP due to increasing returns or other reasons. I address the role of technology by investigating the dynamic interactions of inputs, TFP and two observable indicators of… 

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