How Do Canadian Hours Worked Respond to a Technology Shock?

22 Pages Posted: 6 Oct 2003

See all articles by Lawrence J. Christiano

Lawrence J. Christiano

Northwestern University; Federal Reserve Bank of Cleveland; Federal Reserve Bank of Chicago; Federal Reserve Bank of Minneapolis; National Bureau of Economic Research (NBER)

Martin Eichenbaum

Northwestern University; National Bureau of Economic Research (NBER)

Robert J. Vigfusson

Board of Governors of the Federal Reserve System

Date Written: September 2003

Abstract

This paper investigates the response of hours worked to a permanent technology shock. Based on annual data from Canada, we argue that hours worked rise after a positive technology shock. We obtain a similar result using annual data from the United States. These results contradict a large literature that claims that a positive technology shock causes hours worked to fall. We find that the different results are due to the literature making a specification error in the statistical model of per capital hours worked. Finally, we present results that Canadian monetary policy has accommodated technology shocks.

Keywords: productivity, long-run restriction, hours worked, weak instruments

JEL Classification: O51

Suggested Citation

Christiano, Lawrence J. and Eichenbaum, Martin and Vigfusson, Robert John, How Do Canadian Hours Worked Respond to a Technology Shock? (September 2003). Available at SSRN: https://ssrn.com/abstract=449820 or http://dx.doi.org/10.2139/ssrn.449820

Lawrence J. Christiano

Northwestern University ( email )

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Martin Eichenbaum

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