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Are long‐run output growth rates falling?

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  • Mengheng Li
  • Ivan Mendieta‐Muñoz

Abstract

This paper studies the evolution of long‐run output and technical progress growth rates in the G‐7 countries during the post‐war period by considering the concept of the natural rate of growth. We use time‐varying parameter models that incorporate both stochastic volatility and a Heckman‐type two‐step estimation procedure that deals with the possible endogeneity problem in the econometric models. Our results show a significant decline in long‐run growth rates that is not associated with the detrimental effects of the Great Recession, and that the rate of growth of technical progress appears to be behind the slowdown in long‐run GDP growth.

Suggested Citation

  • Mengheng Li & Ivan Mendieta‐Muñoz, 2020. "Are long‐run output growth rates falling?," Metroeconomica, Wiley Blackwell, vol. 71(1), pages 204-234, February.
    • Handle: RePEc:bla:metroe:v:71:y:2020:i:1:p:204-234
    DOI: 10.1111/meca.12275
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    Cited by:

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    4. Marcio Santetti, 2023. "A time-varying finance-led model for U.S. business cycles," Papers 2310.05153, arXiv.org, revised Jan 2024.
    5. Felipe, Jesus & Estrada, Gemma & Lanzafame, Matteo, 2022. "The turnaround in Philippine growth: From disappointment to promising success," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 327-342.
    6. Stamegna, Marco, 2022. "Induced innovation, the distributive cycle, and the changing pattern of labour productivity cyclicality: a SVAR analysis for the US economy," MPRA Paper 113855, University Library of Munich, Germany.

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    JEL classification:

    • C - Mathematical and Quantitative Methods
    • O - Economic Development, Innovation, Technological Change, and Growth

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