Technology shocks are events in a macroeconomic model, that change the production function. Usually this is modelled with an aggregate production function that has a scaling factor.
A technology shock affects an industry or firm's productivity, this may be a positive shock - increasing the output for a given set of inputs, or a negative shock - decreasing the output for a given set of inputs. Negative shocks are much less common than positive shocks as technology rarely moves backwards.
Famous quotes containing the words technology and/or shock:
“The real accomplishment of modern science and technology consists in taking ordinary men, informing them narrowly and deeply and then, through appropriate organization, arranging to have their knowledge combined with that of other specialized but equally ordinary men. This dispenses with the need for genius. The resulting performance, though less inspiring, is far more predictable.”
—John Kenneth Galbraith (b. 1908)
“I was not long since in a company where I wot not who of my fraternity brought news of a kind of pills, by true account, composed of a hundred and odd several ingredients; whereat we laughed very heartily, and made ourselves good sport; for what rock so hard were able to resist the shock or withstand the force of so thick and numerous a battery?”
—Michel de Montaigne (1533–1592)