The role of investment-specific technological change in the business cycle

This is a quantitative investigation of the importance of technological cha nge specific to new investment goods for postwar US aggregate fluctuations. A growth model that incorporates this form of technological change is cali brated to US data and simulated, using the relative price of new equipment to identify the process driving investment-specific technology shocks. The analysis suggests that this form of technological change is the source of a bout 30% of output fluctuations. (C) 2000 Elsevier Science B.V. All rights reserved.