This paper presents evidence on the relationship between cyclical shocks and productivity growth, for 20 2-digit SIC US manufacturing industries and a set of monetary policy, fiscal policy, and oil price shocks. The paper uses as a measure of productivity change a Solow residual corrected for a wide range of non-technological effects due to imperfect-competition, non-constant returns to scale, and cyclical utilization rates of capital and labor services. The empirical framework identifies policy shocks independently of productivity measurement issues via a two-step procedure. While the typical industry shows weak responses of productivity to the shocks considered, in some industries temporary contractionary policy shocks lead to increases in productivity. In addition, the results reveal that there are localized asymmetries, with contractionary policy shocks having larger productivity effects than their expansionary counterparts. The results support the thesis that job reallocation is an important channel linking contractionary policy shocks and productivity growth. These results support the pit-stop view of downturns. Copyright Springer-Verlag Berlin/Heidelberg 2005
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.