Estimating and Forecasting Aggregate Productivity Growth Trends in the US and Germany
This paper addresses the issue of estimating and forecasting productivity growth trends in the US and Germany from the perspective of a business cycle researcher who wants to use the available information in time series of aggregate labor productivity to derive a model for short- and/or long-term forecasts of labour productivity. We will use stability tests and a deterministic model with structural breaks that is estimated using the methods mentioned in Hansen (2001). The methodological approach also draws on Gordon (2003) using a Kalman filter specification. We discuss the implications of unit-root assumptions for long-term forecasts and argue in favor of a near unit-root modelling. That implies a convergence of productivity growth rates in both countries within the next 15 years.
|Length:||II, 30 p.|
|Date of creation:||2005|
|Contact details of provider:|| Postal: Mohrenstraße 58, D-10117 Berlin|
Web page: http://www.diw.de/en
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- Julio J. Rotemberg & Lawrence H. Summers, 1990. "Inflexible Prices and Procyclical Productivity," The Quarterly Journal of Economics, Oxford University Press, vol. 105(4), pages 851-874.
- Rosenberg,Nathan, 1994.
"Exploring the Black Box,"
Cambridge University Press, number 9780521459556, October.
- Paul M Romer, 1999.
"Increasing Returns and Long-Run Growth,"
Levine's Working Paper Archive
2232, David K. Levine.
- Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
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