Technology, employment, and the business cycle: Do technology shocks explain aggregate fluctuations?

I estimate a decomposition of productivity and hours into technology and no ntechnology components. Two results stand out: (a) the estimated conditiona l correlations of hours and productivity are negative for technology shocks , positive for nontechnology shocks; (b) hours show a persistent decline in response to a positive technology shock. Most of the results hold for a va riety of model specifications, and for the majority of G7 countries. The pi cture that emerges is hard to reconcile with a conventional real-business-c ycle interpretation of business cycles, but is shown to be consistent with a simple model with monopolistic competition and sticky prices. (JEL E32, E 24).