Trend Breaks, Long-Run Restrictions and the Contractionary Effects of Technology Improvements

JEL codes: 
E24, E32, O47
Version Date: 
Mar 2006

Structural vector-autoregressions with long-run restrictions are extraordinarily sensitive to low-frequency correlations. This paper explores this sensitivity analytically and via simulations, focusing on the contentious issue of whether hours worked rise or fall when technology improves.

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