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What drives endogenous growth in the United States?

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  • Wesselbaum Dennis

    (University of Hamburg, German Physical Society, and EABCN, Hamburg, Germany)

Abstract

The cleansing effects of recessions are investigated. We estimate a DSGE model allowing for endogenous growth to be driven by two competing theories. Either learning-by-doing effects or cleansing effects of recessions drive endogenous growth. Using Bayesian estimation techniques we find that reallocation effects in recessions dominate and also non-technological innovations have effects on productivity and, hence, long-run growth. Furthermore, we show that using directly observable TFP in the estimation has sizable effects on parameter estimates, the identification of shocks, and model dynamics.

Suggested Citation

  • Wesselbaum Dennis, 2015. "What drives endogenous growth in the United States?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(1), pages 183-221, January.
    • Handle: RePEc:bpj:bejmac:v:15:y:2015:i:1:p:39:n:5
    DOI: 10.1515/bejm-2013-0179
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    1. Dennis Wesselbaum, 2018. "Fiscal Policy in a Business Cycle Model with Endogenous Productivity," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 103-135, May.

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    Keywords

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    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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