The effects of technology shocks on hours and output: a robustness analysis

We analyze the effects of neutral and investment-specific technology shocks on hours and output. Long cycles in hours are removed in a variety of ways. Hours robustly fall in response to neutral shocks and robustly increase in response to investment-specific shocks. The percentage of the variance of hours (output) explained by neutral shocks is small (large); the opposite is true for investment-specific shocks. 'News shocks' are uncorrelated with the estimated technology shocks. Copyright © 2009 John Wiley & Sons, Ltd.