Our answer: not so well. We reach that conclusion after reviewing recent research on the role of technology as a source of economic fluctuations. The bulk of the evidence suggests a limited role for aggregate technology shocks, pointing instead to demand factors as the main force behind the...

Intro -- Contents -- I. INTRODUCTION -- II. ESTIMATING THE EFFECTS OF TECHNOLOGY SHOCKS -- III. POSSIBLE PITFALLS IN THE ESTIMATION OF THE EFFECTS OF TECHNOLOGY SHOCKS -- IV. EXPLAINING THE EFFECTS OF TECHNOLOGY SHOCKS -- V. TECHNOLOGY SHOCKS AND THE BUSINESS CYCLE IN AN ESTIMATED DSGE MODEL --...

A puzzle in international macroeconomics is that observed real exchange rates are highly volatile. Standard international real business cycle (IRBC) models cannot reproduce this fact. We show that TFP processes for the U.S. and the ""rest of the world,"" is characterized by a vector error...