Technology Shocks and Hours Worked: Checking for Robust Conclusions

This paper presents some new results on the effects of technology shocks on hours worked based on structural VAR specifications containing various measures of US productivity growth and hours. These specifications can produce different answers depending on which sector of the economy is examined, which transformation of hours worked is used, and on how many lags are chosen for the VAR. However, it is shown that the results from the stochastic trend specification used by Jordi Gaĺı (1999) are robust across changes in data definition and lag length, while the results from the per capita hours specification of Christiano, Eichenbaum, and Vigfusson (2003) are not. These results provide support for Gaĺı’s findings that technology shocks have a negative impact effect on hours worked and that these shocks play a limited role in generating the business cycle. ∗E-mail: [email protected]. The views expressed in this paper are my own and do not necessarily reflect those of the Central Bank of Ireland or the ESCB.