Estimates of the productivity trend using time-varying parameter techniques
In the second half of the 1990s, U.S. productivity growth moved up to rates not seen in several decades. In this paper, I use time-varying parameter techniques to isolate trend from cyclical movements in productivity and to obtain an estimate of the trend rate of productivity growth. I examine models both with and without an explicit role for capital accumulation. I find that in the models without an explicit role for capital accumulation, trend productivity growth is estimated to have moved up from around 1-1/2 percent in the period from the early 1970s to the mid 1990s, to about 2-1/2 percent by the final observation used in this paper, the second quarter of 2000. I find that if I allow for an explicit role for capital accumulation, the recent pace of trend productivity growth is even higher, at around 3 percent.
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Federal Reserve Bank of San Francisco.
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