This dissertation is a theoretical and empirical examination of macroeconomic fluctuations. In particular, it focuses on understanding the short- and medium-run effects of changes in technology, developing propagation mechanisms in business-cycle models, and considering the implications of imperfect competition for the behavior of business fixed investment.; In Chapter I, I develop a quantitative, general-equilibrium business cycle model with imperfect common knowledge regarding technology shocks. I show that the model has the ability to explain the short-run contractionary effects of technology improvements. In particular, the model predicts that a positive technology shock leads to a persistent decline in employment and a delayed, sluggish fall in inflation. Using the model, I also examine the role of monetary policy in stabilizing macroeconomic fluctuations originating from technology shocks. I then find that monetary policy tends to fall short of accommodation of technology improvements when the central bank has only imperfect information on the state of the technology.; In Chapter II, I attempt to construct a measure of “true” aggregate technical change for the Japanese economy over 1973–1998, controlling for imperfect competition, cyclical utilization of capital and labor, and reallocation effects. I then find little evidence of a decline in the pace of technological progress during the 1990s. Both cyclical utilization and reallocations of inputs across industries appear to have played an important role in lowering measured productivity growth relative to true technology growth. My results thus cast doubt on an explanation of Japan's “lost decade” that attributes the prolonged slump to the observed productivity slowdown.; In Chapter III, I propose a new method for empirical implementation of the Q-theory for investment. In particular, by solving a firm's dynamic cost minimization problem under fairly general conditions, I derive the Q-theory Euler equation that is robust to a large variety of phenomena such as imperfect competition, increasing returns to scale, sticky output prices, and cyclical fluctuations in the markup. Using data on U.S. manufacturing industries, I then find that my new empirical Euler equation for investment helps in providing a remedy for the poor empirical performance of the Q-theory.
展开▼
