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Shocking Stuff: Technology, Hours, and Factor Substitution

Cantore, Cristiano, Leon-Ledesma, Miguel A., McAdam, Peter, Willman, Alpo (2014) Shocking Stuff: Technology, Hours, and Factor Substitution. Journal of the European Economic Association, 12 (1). pp. 108-128. ISSN 1542-4766. E-ISSN 1542-4774. (doi:10.1111/jeea.12038) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided. (Contact us about this Publication)
Official URL
http://dx.doi.org/10.1111/jeea.12038

Abstract

The response of hours to technology shocks is a key controversy in macroeconomics. We show that differences between RBC and NK models hinge on highly restrictive views of technology. We introduce CES production technologies and demonstrate that the response of hours depends on the factor-augmenting nature of shocks and the capital–labor substitution elasticity in both models. We develop analytical expressions to establish the thresholds determining its sign. This opens new margins for shock identification combining theory and VAR evidence. We discuss how our models provide new robust restrictions for empirical work, especially using the labor income share.

Item Type: Article
DOI/Identification number: 10.1111/jeea.12038
Additional information: number of additional authors: 3;
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Stewart Brownrigg
Date Deposited: 07 Mar 2014 00:05 UTC
Last Modified: 01 Aug 2019 10:37 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/40521 (The current URI for this page, for reference purposes)
Leon-Ledesma, Miguel A.: https://orcid.org/0000-0002-3558-2990
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