UK Business Cycles Impacted by Technology Shocks, Hours Worked Decline
After a technology shock in the UK, hours worked decrease persistently. This response remains consistent across various factors like labour input measures and types of technology shocks. The UK's economy shows a unique reaction to technology shocks, with a strong negative link between productivity and hours worked. Models with sticky prices and specific types of shocks seem to best explain the short-term effects. However, technology shocks only explain a small portion of the variation in hours and output during UK business cycles.