TY  - JOUR
AU  - Francis,Neville
AU  - Ramey,Valerie A.
TI  - Is the Technology-Driven Real Business Cycle Hypothesis Dead?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8726
PY  - 2002
Y2  - January 2002
UR  - http://www.nber.org/papers/w8726
L1  - http://www.nber.org/papers/w8726.pdf
N1  - Author contact info:
Neville Francis
Department of Economics
University of North Carolina
Gardner Hall, CB#3305
Chapel Hill, NC 27599
Tel: 919-966-5327
E-Mail: nfrancis@unc.edu

Valerie A. Ramey
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-2388
Fax: 858/534-7040
E-Mail: VRAMEY@UCSD.EDU
AB  - In this paper, we re-examine the recent evidence that technology shocks do not produce business cycle patterns in the data.  We first extend Gal¡'s (1999) work, which uses long-run restrictions to identify technology shocks, by examining whether the identified shocks can be plausibly interpreted as technology shocks.  We do this in three ways.  First, we derive additional long-run restrictions and use them as tests of overidentification.  Second, we compare the qualitative implications from the model with the impulse responses of variables such as wages and consumption.  Third, we test whether some standard 'exogenous' variables predict the shock variables. We find that oil shocks, military build-ups, and Romer dates do not predict the shock labeled 'technology.'  We then show ways in which a standard DGE model can be modified to fit Gal¡'s finding that a positive technology shock leads to lower labor input. Finally, we re-examine the properties of the other key shock to the system.
ER  -