Are positive technology shocks expansionary at the zero lower bound?

Globalization has resulted in several technical advancements, including the ability to connect people all over the world and drive the economies with higher agricultural output. With agricultural productivity expanding quickly, the negative impact of globalization on environmental degradation is being disregarded. Rapid agricultural expansion and globalization have resulted in significant increases in energy consumption and CO2 emissions. The primary purpose of this research is to assess the role of Pakistan’s massive agriculture industry in encouraging or discouraging CO2 emissions under Globalization scenario. Therefore, we applied Non-linear Autoregressive Distributive Lag Nonlinear Autoregressive Distributed Lag model from 1971 to 2021. Our results showed that in presence of globalization, agricultural production shows asymmetries in case of positive and negative shocks. A positive shock in Agricultural production increased the CO2 emissions while negative shock in agricultural production decreased CO2 emissions. Furthermore, GDP, energy consumption and economic globalization have positive association with economic globalization while on the other hand, surprisingly trade and urbanization in the presence of globalization have negative association with CO2 emissions. Environmental deterioration due to greenhouse emissions causes climatic variation in the economy and several mitigation strategies are required on sustainable basis in Pakistan. So, our study recommends that farmers of Pakistan should adopt organic farming this will help to reduce CO2 emissions.

In financial markets with asymmetric information about mean returns, borrowers with different default risks may pay the same rate of interest. If they do, the marginal borrower will have a high-risk, negative-value project. Under some conditions, technological change that increases each entrepreneur's output will attract a new set of negative-value projects. This adverse selection process will erode the ability rents of the inframarginal borrowers. I present an example in which it destroys the market. The results imply that a boom in a sector can lead to a crisis if institutional change to solve the screening problem does not occur.

Extra! Extra! Some positive technology shocks are expansionary!

The debate about the impact of technology on employment has always had a central role in economic theory. At the same time, the nexus of technological progress and employment might depend on macroeconomic regimes. In this work we investigate the interrelations among technology, output and employment in the U.S. economy in growth recessions vs. growth expansions. More precisely, using U.S. data we estimate different threshold vector autoregressions (TVARs) with TFP, hours, and GDP, employing the latter as threshold variable, and assess the generalized impulse responses of GDP and hours as to TFP shocks. For our entire period of observation, 1957Q1–2011Q4, positive technology shocks, while spurring GDP growth, by and large, display a negative effect on hours worked in growth recessions, but they are not significantly different from zero in good times. Yet, since the mid eighties (1984Q1–2011Q4) productivity shocks increase hours worked in low growth periods. The results are mainly driven by the response of labor along the extensive margin (number of employees), and remain persistent so in the face of a battery of robustness checks.

Technology Shocks, Employment, and Labor Market Frictions

This paper characterizes Federal Reserve policy since 1980 as one that actively manages short-term nominal interest rates in order to control inflation and evaluates this policy using a dynamic, stochastic, sticky-price model of the United States economy.The results show that the Fed's policy insulates aggregate output from the effects of exogenous demand-side disturbances and, by calling for a modest but persistent reduction in short-term interest rates following a positive technology shock, helps the economy to respond to supply-side disturbances as it would in the absence of nominal rigidities.

Supply shocks and employment in an open economy

Is the technology-driven real business cycle hypothesis dead? Shocks and aggregate fluctuations revisited

Optimal bond holding dynamics with hedging against real exchange rate risks

A quartet of asset pricing models in nominal and real economies

We reassess the evidence for (or against) a key implication of the basic real business cycle model: that aggregate hours worked increase in response to a positive technology shock. Two novel aspects are the scope (14 OECD countries) and the inclusion of data on both labor supply margins to analyze the key margin of adjustment in aggregate hours. The short-run response of aggregate hours to a positive technology shock is remarkably similar across countries, with an impact fall in 13 out of 14 countries. In contrast, its decomposition into intensive and extensive labor supply margins reveals substantial heterogeneity in labor market dynamics across OECD countries. For instance, movements in the intensive margin are the dominant channel of adjustment in aggregate hours in 6 out of 14 countries of our sample, including France and Japan.

We study, analytically and empirically, how technological changes affect the nexus between resource abundance and economic growth. Our two-sector model indicates that capital-augmenting technological improvements can be contemporaneously contractionary in resource-rich economies, and expansionary elsewhere, due to differences in the size of the elasticity of substitution between labor and capital. In addition, such improvements yield relatively steeper expansionary patterns in resource-rich economies in the longer run. We test these predictions using a panel of U.S. states and counties. Our identification strategy rests on geographically-entrenched differences in resource endowments, and the adoption of plausibly exogenous technology shocks at the national level. Our core estimates corroborate our predictions. First, we document persistent differences in the elasticity of substitution between capital and labor across the natural-resource dimension. Second, we find that an increase in TFP is on impact contractionary in resource-rich states, but is non-contractionary (at worst) in resource-poor ones. Third, we illustrate that in the longer term a positive technology shock expands output and inputs in resource-rich economies relatively more strongly. Our results shed light on hitherto overlooked potential adverse effects of natural resource abundance.

Productivity Shocks in a Model with Vintage Capital and Heterogeneous Labor

The paper examines the impact of labor supply shocks, wage bargaining shocks, productivity shocks, and external and domestic demand shocks on the Russian labor market from 2017 to 2024. Using a Bayesian vector autoregression (BVAR) identified through sign restrictions and performing a historical decomposition, the study finds that both macroeconomic and market-specific shocks influence key labor market variables. Special attention is given to the factors contributing to labor market imbalances in recent years. The results indicate that the primary drivers of declining unemployment and rising employment since late 2022 have been positive domestic demand and productivity shocks, whereas external demand and wage bargaining shocks have constrained labor demand growth. The labor market conditions observed since spring 2023 can be characterized as a job seeker’s market. The normalization of domestic demand and the rise in real wages are helping to restore equilibrium in the Russian labor market.

Real business-cycle model with habits: Empirical investigation