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Shocking Stuff: Technology, Hours, And Factor Substitution

Cantore, C, Leon-Ledsma, M, McAdam, P and Willman, A (2014) Shocking Stuff: Technology, Hours, And Factor Substitution Journal of the European Economic Association, 12 (1). pp. 108-128.

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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
Authors :
NameEmailORCID
Cantore, Cc.cantore@surrey.ac.ukUNSPECIFIED
Leon-Ledsma, MUNSPECIFIEDUNSPECIFIED
McAdam, Pp.mcadam@surrey.ac.ukUNSPECIFIED
Willman, AUNSPECIFIEDUNSPECIFIED
Date : 1 February 2014
Identification Number : 10.1111/jeea.12038
Contributors :
ContributionNameEmailORCID
UNSPECIFIEDCanova, FUNSPECIFIEDUNSPECIFIED
Related URLs :
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:31
Last Modified : 17 May 2017 14:36
URI: http://epubs.surrey.ac.uk/id/eprint/820210

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