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Journal Article
At the Richmond Fed: Talking Technology-Enabled Disruption
Understanding the economic effects of technological change — and of the world-changing disruptions that new technologies may bring about — is important for central bankers. Maintaining price stability means paying attention to how technology empowers buyers to shop for lower prices, for example, adding pressure on the margins of sellers. Maintaining maximum employment means closely watching how technology restructures or eliminates jobs, adding pressure on the income gains and productivity growth of workers. Technology-enabled disruption also influences business investment: Companies ...
Working Paper
Learning about Regime Change
Total factor productivity (TFP) and investment specific technology (IST) growth both exhibit regime-switching behavior, but the regime at any given time is difficult to infer. We build a rational expectations real business cycle model where the underlying TFP and IST regimes are unobserved. We then develop a general perturbation solution algorithm for a wide class of models with unobserved regime-switching. Using our method, we show that learning about regime-switching alters the responses to regime shifts and intra-regime shocks, increases asymmetries in the responses, generates forecast ...