IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v101y2021ics0264999321001188.html
   My bibliography  Save this article

Accounting for U.S. economic growth 1954–2017

Author

Listed:
  • del Río, Fernando
  • Lores, Francisco-Xavier

Abstract

We perform a growth accounting exercise using the whole neoclassical growth model for the u.s. economy during 1954–2017. Our growth accounting exercise reveals that the u.s. extraordinary economic growth in the 1960s has been mainly driven by the increase of the labor efficiency, whereas the growth slowdowns in the 1970s and the first decade of 21st century were mainly driven by the decline in the capital efficiency. However, the reduction of the distortions on the labor supply driven the subsequent recoveries in the 1980s and after the Great Recession.

Suggested Citation

  • del Río, Fernando & Lores, Francisco-Xavier, 2021. "Accounting for U.S. economic growth 1954–2017," Economic Modelling, Elsevier, vol. 101(C).
  • Handle: RePEc:eee:ecmode:v:101:y:2021:i:c:s0264999321001188
    DOI: 10.1016/j.econmod.2021.105529
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999321001188
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.econmod.2021.105529?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2002. "Accounting for the Great Depression (technical appendix)," Working Papers 619, Federal Reserve Bank of Minneapolis.
    2. Shu-Shiuan Lu, 2012. "East Asian growth experience revisited from the perspective of a neoclassical model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(3), pages 359-376, July.
    3. Erasmus Kersting, 2008. "The 1980s Recession in the UK: A Business Cycle Accounting Perspective," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 179-191, January.
    4. Brinca Pedro, 2013. "Monetary business cycle accounting for Sweden," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 1-35, October.
    5. Brinca, Pedro, 2014. "Distortions in the neoclassical growth model: A cross-country analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 1-19.
    6. Otsu Keisuke, 2010. "A Neoclassical Analysis of the Asian Crisis: Business Cycle Accounting for a Small Open Economy," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-39, July.
    7. Cheremukhin, Anton & Golosov, Mikhail & Guriev, Sergei & Tsyvinski, Aleh, 2015. "The Economy of People’s Republic of China from 1953," CEPR Discussion Papers 10764, C.E.P.R. Discussion Papers.
    8. H. Uzawa, 1961. "Neutral Inventions and the Stability of Growth Equilibrium," Review of Economic Studies, Oxford University Press, vol. 28(2), pages 117-124.
    9. Edward C. Prescott, 2004. "Why do Americans work so much more than Europeans?," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 28(Jul), pages 2-13.
    10. Loukas Karabarbounis, 2014. "The Labor Wedge: MRS vs. MPN," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(2), pages 206-223, April.
    11. Kobayashi, Keiichiro & Inaba, Masaru, 2006. "Business cycle accounting for the Japanese economy," Japan and the World Economy, Elsevier, vol. 18(4), pages 418-440, December.
    12. Christina D. Romer & David H. Romer, 2010. "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks," American Economic Review, American Economic Association, vol. 100(3), pages 763-801, June.
    13. William Nordhaus, 2004. "Retrospective on the 1970s Productivity Slowdown," NBER Working Papers 10950, National Bureau of Economic Research, Inc.
    14. Roman Sustek, 2011. "Monetary Business Cycle Accounting," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(4), pages 592-612, October.
    15. Harold L. Cole & Lee E. Ohanian, 2002. "The U.S. and U.K. Great Depressions Through the Lens of Neoclassical Growth Theory," American Economic Review, American Economic Association, vol. 92(2), pages 28-32, May.
    16. Daniel Fehrle & Johannes Huber, 2020. "Business cycle accounting for the German fiscal stimulus program during the Great Recession," Working Papers 197, Bavarian Graduate Program in Economics (BGPE).
    17. Brinca, P. & Chari, V.V. & Kehoe, P.J. & McGrattan, E., 2016. "Accounting for Business Cycles," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1013-1063, Elsevier.
    18. Gary D. Hansen & Lee E. Ohanian & Fatih Ozturk, 2020. "Dynamic General Equilibrium Modeling of Long and Short-Run Historical Events," NBER Working Papers 28090, National Bureau of Economic Research, Inc.
    19. Ohanian, Lee E. & Raffo, Andrea, 2012. "Aggregate hours worked in OECD countries: New measurement and implications for business cycles," Journal of Monetary Economics, Elsevier, vol. 59(1), pages 40-56.
    20. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    21. Gordon, Robert J., 2007. "The Measurement of Durable Goods Prices," National Bureau of Economic Research Books, University of Chicago Press, number 9780226304601, January.
    22. Robert J. Gordon, 2000. "Interpreting the "One Big Wave" in U.S. Long-Term Productivity Growth," NBER Working Papers 7752, National Bureau of Economic Research, Inc.
    23. Brinca, Pedro & Costa-Filho, João & Loria, Francesca, 2020. "Business Cycle Accounting: what have we learned so far?," MPRA Paper 100180, University Library of Munich, Germany.
    24. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2007. "Business Cycle Accounting," Econometrica, Econometric Society, vol. 75(3), pages 781-836, May.
    25. Fernando del Río & Francisco‐Xavier Lores, 2019. "The Decline in Capital Efficiency and Labour Share," Economica, London School of Economics and Political Science, vol. 86(344), pages 635-662, October.
    26. Prescott, Edward C, 1998. "Needed: A Theory of Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-551, August.
    27. Dooyeon Cho & Antonio Doblas-Madrid, 2013. "Business Cycle Accounting East and West: Asian Finance and the Investment Wedge," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(4), pages 724-744, October.
    28. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2003. "Accounting for the Great Depression," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 27(Spr), pages 2-8.
    29. Robert J. Gordon, 1999. "U.S. Economic Growth since 1870: One Big Wave?," American Economic Review, American Economic Association, vol. 89(2), pages 123-128, May.
    30. Anton Cheremukhin & Mikhail Golosov & Sergei Guriev & Aleh Tsyvinski, 2017. "The Industrialization and Economic Development of Russia through the Lens of a Neoclassical Growth Model," Review of Economic Studies, Oxford University Press, vol. 84(2), pages 613-649.
    31. Tiago Cavalcanti, 2007. "Business cycle and level accounting: the case of Portugal," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 6(1), pages 47-64, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. del Río, Fernando & Lores, Francisco-Xavier, 2020. "Accounting for U.S. post-war economic growth," MPRA Paper 100716, University Library of Munich, Germany.
    2. Brinca, P. & Chari, V.V. & Kehoe, P.J. & McGrattan, E., 2016. "Accounting for Business Cycles," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1013-1063, Elsevier.
    3. Brinca, Pedro & Costa-Filho, João & Loria, Francesca, 2020. "Business Cycle Accounting: what have we learned so far?," MPRA Paper 100180, University Library of Munich, Germany.
    4. Fernandes, Daniel, 2022. "Business Cycle Accounting for the COVID-19 Recession," MPRA Paper 111577, University Library of Munich, Germany.
    5. Brinca, Pedro & Costa-Filho, João, 2021. "Economic depression in Brazil: the 2014-2016 fall," MPRA Paper 107298, University Library of Munich, Germany.
    6. Hansen, G.D. & Ohanian, L.E., 2016. "Neoclassical Models in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 2043-2130, Elsevier.
    7. Brinca, Pedro & João, Costa-Filho, 2021. "Output falls and the international transmission of crises," MPRA Paper 107297, University Library of Munich, Germany.
    8. Matheus Cardoso Leal & Marcio Issao Nakane, 2022. "Brazilian economy in the 2000’s: A tale of two recessions," Working Papers, Department of Economics 2022_20, University of São Paulo (FEA-USP).
    9. Hirata, Hideaki & Otsu, Keisuke, 2016. "Accounting for the economic relationship between Japan and the Asian Tigers," Journal of the Japanese and International Economies, Elsevier, vol. 41(C), pages 57-68.
    10. Shu-Shiuan Lu, 2012. "East Asian growth experience revisited from the perspective of a neoclassical model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(3), pages 359-376, July.
    11. Brinca, Pedro, 2014. "Distortions in the neoclassical growth model: A cross-country analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 1-19.
    12. Daniel Fehrle & Johannes Huber, 2020. "Business cycle accounting for the German fiscal stimulus program during the Great Recession," Discussion Paper Series 339, Universitaet Augsburg, Institute for Economics.
    13. Brinca, Pedro & Iskrev, Nikolay & Loria, Francesca, 2018. "On Identification Issues in Business Cycle Accounting Models," MPRA Paper 90250, University Library of Munich, Germany.
    14. David Coble & Sebastián Faúndez, 2016. "The labor wedge and business cycles in Chile," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 19(1), pages 38-56, April.
    15. Inaba, Masaru & Nutahara, Kengo & Shirai, Daichi, 2022. "What drives fluctuations of labor wedge and business cycles? Evidence from Japan," Journal of Macroeconomics, Elsevier, vol. 72(C).
    16. Ge, Xinyu & Li, Xiao-Lin & Li, Yong & Liu, Yan, 2022. "The driving forces of China's business cycles: Evidence from an estimated DSGE model with housing and banking," China Economic Review, Elsevier, vol. 72(C).
    17. Gerth Florian & Otsu Keisuke, 2018. "The post-crisis slump in Europe: a business cycle accounting analysis," The B.E. Journal of Macroeconomics, De Gruyter, vol. 18(1), pages 1-25, January.
    18. Masaru Inaba & Kengo Nutahara, 2012. "An application of business cycle accounting with misspecified wedges," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 265-269, April.
    19. Vasilev, Aleksandar, 2017. "Business Cycle Accounting: Bulgaria after the introduction of the currency board arrangement (1999-2014)," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 197-219.
    20. Kobayashi, Keiichiro & Inaba, Masaru, 2006. "Business cycle accounting for the Japanese economy," Japan and the World Economy, Elsevier, vol. 18(4), pages 418-440, December.

    More about this item

    Keywords

    Growth accounting; Capital-efficiency wedge; Labor-efficiency wedge; Labor wedge; Investment wedge; Resource constraint wedge; Productivity; Labor share; Hours worked;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:101:y:2021:i:c:s0264999321001188. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.