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International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page How do Canadian Hours Worked Respond to a Technology Shock?
Lawrence J Christiano; Martin Eichenbaum; Robert Vigfusson
2003-774  (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.

Full paper (292 KB PDF)

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

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Last update: September 17, 2003