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Hours per capita and productivity: evidence from correlated unobserved components models

  • Arabinda Basistha

    (Department of Economics, College of Business and Economics, West Virginia University, Morgantown, West Virginia, USA)

Recent studies debate the effect of a permanent productivity shock on hours per capita within a structural VAR context. This paper examines the issue using a correlated unobserved components (UC) framework. The estimates show that permanent shocks to productivity are negatively correlated with transitory shocks to hours. This result is robust for non-stationary or levels stationary specifications of hours. Model comparisons indicate that the data do not favor imposing VAR-type restrictions on the UC models. Copyright © 2008 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 24 (2009)
Issue (Month): 1 ()
Pages: 187-206

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Handle: RePEc:jae:japmet:v:24:y:2009:i:1:p:187-206
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