Methods versus Substance: Measuring the Effects of Technology Shocks on Hours

José-Víctor Ríos-Rull, Frank Schorfheide, Cristina Fuentes-Albero, Maxym Kryshko, Raül Santaeulàlia-Llopis

NBER Working Paper No. 15375
Issued in September 2009
NBER Program(s):   EFG   ME

In this paper, we employ both calibration and modern (Bayesian) estimation methods to assess the role of neutral and investment-specific technology shocks in generating fluctuations in hours. Using a neoclassical stochastic growth model, we show how answers are shaped by the identification strategies and not by the statistical approaches. The crucial parameter is the labor supply elasticity. Both a calibration procedure that uses modern assessments of the Frisch elasticity and the estimation procedures result in technology shocks accounting for 2% to 9% of the variation in hours worked in the data. We infer that we should be talking more about identification and less about the choice of particular quantitative approaches.

(442 K)

This paper is available as PDF (442 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX