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José-Víctor Ríos-Rull, Frank Schorfheide, Cristina Fuentes-Albero, Maxym Kryshko, Raül Santaeulàlia-Llopis
NBER Working Paper No. 15375
Issued in September 2009
NBER Program(s): EFG
ME
---- Abstract -----
In this paper, we employ both calibration and modern (Bayesian) estimation methods to assess the role of neutral and investment-specific technology shocks in generating fluctuations in hours. Using a neoclassical stochastic growth model, we show how answers are shaped by the identification strategies and not by the statistical approaches. The crucial parameter is the labor supply elasticity. Both a calibration procedure that uses modern assessments of the Frisch elasticity and the estimation procedures result in technology shocks accounting for 2% to 9% of the variation in hours worked in the data. We infer that we should be talking more about identification and less about the choice of particular quantitative approaches.
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