What (really) accounts for the fall in hours after a technology shock? /

What (really) accounts for the fall in hours after a technology shock? /

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Bibliographic Details
Author / Creator:	Rebei, Nooman, 1972- author.
Imprint:	[Washington, D.C.] : International Monetary Fund, ©2012.
Description:	1 online resource (41 pages)
Language:	English
Series:	IMF working paper ; WP/12/211 IMF working paper ; WP/12/211.
Subject:	Prices -- Econometric models. Business cycles -- Econometric models. Business cycles -- Econometric models. Prices -- Econometric models.
Format:	E-Resource Book
URL for this record:	http://pi.lib.uchicago.edu/1001/cat/bib/11142013

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Other authors / contributors:	International Monetary Fund. Institute for Capacity Development.
ISBN:	1475580576 9781475580570 1475505612 9781475505610 147555236X 9781475552362 9781475505610 9781475552362
Digital file characteristics:	data file
Notes:	Title from PDF title page (IMF Web site, viewed August 29, 2012). "Institute for Capacity Development Department." "August 2012." Includes bibliographical references.
Summary:	The paper asks how state of the art DSGE models that account for the conditional response of hours following a positive neutral technology shock compare in a marginal likelihood race. To that end we construct and estimate several competing small-scale DSGE models that extend the standard real business cycle model. In particular, we identify from the literature six different hypotheses that generate the empirically observed decline in worked hours after a positive technology shock. These models alternatively exhibit (i) sticky prices; (ii) firm entry and exit with time to build; (iii) habit in consumption and costly adjustment of investment; (iv) persistence in the permanent technology shocks; (v) labor market friction with procyclical hiring costs; and (vi) Leontief production function with labor-saving technology shocks. In terms of model posterior probabilities, impulse responses, and autocorrelations, the model favored is the one that exhibits habit formation in consumption and investment adjustment costs. A robustness test shows that the sticky price model becomes as competitive as the habit formation and costly adjustment of investment model when sticky wages are included.

Description
Summary:	The paper asks how state of the art DSGE models that account for the conditional response of hours following a positive neutral technology shock compare in a marginal likelihood race. To that end we construct and estimate several competing small-scale DSGE models that extend the standard real business cycle model. In particular, we identify from the literature six different hypotheses that generate the empirically observed decline in worked hours after a positive technology shock. These models alternatively exhibit (i) sticky prices; (ii) firm entry and exit with time to build; (iii) habit in consumption and costly adjustment of investment; (iv) persistence in the permanent technology shocks; (v) labor market friction with procyclical hiring costs; and (vi) Leontief production function with labor-saving technology shocks. In terms of model posterior probabilities, impulse responses, and autocorrelations, the model favored is the one that exhibits habit formation in consumption and investment adjustment costs. A robustness test shows that the sticky price model becomes as competitive as the habit formation and costly adjustment of investment model when sticky wages are included.
Item Description:	Title from PDF title page (IMF Web site, viewed August 29, 2012). "Institute for Capacity Development Department." "August 2012."
Physical Description:	1 online resource (41 pages)
Bibliography:	Includes bibliographical references.
ISBN:	1475580576 9781475580570 1475505612 9781475505610 147555236X 9781475552362