The Impact of Technological Change

In this paper I introduce novel measures of technological change, based on counts of books in the field of technology and technological standardization, in an otherwise standard vector autoregressive model, to show the relative importance of unanticipated productivity shocks, technology shocks, and anticipated productivity (news) shocks, in driving macroeconomic fluctuations. The results indicate that news shocks play a more important role than technology shocks at business cycle frequencies, while in the medium- to long-run technology shocks take the lead. Unanticipated productivity shocks do not seem to be a significant source of aggregate fluctuations regardless of the forecast horizon.