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The Interaction Between Business Cycles and Productivity Growth: Evidence from US Industrial Data

  • Jim Malley
  • Anton Muscatelli
  • Ulrich Woitek

In this paper, we employ total factor productivity data adjusted for factor utilisation over the cycle, to model the dynamic interaction between TFP and employment. Our data spans twenty 2-digit SIC code manufacturing sectors in the US. There are two key results. First, we show that the impact of technology shocks on employment cycles is much weaker than suggested by real business cycle-type models, and that in a number of cases employment responds negatively to technology shocks. Second, in examining the impact of demand shocks on TFP, we find some evidence for both opportunity cost and learning-by-doing effects.

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Paper provided by Business School - Economics, University of Glasgow in its series Working Papers with number 9805.

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Date of creation: Mar 1998
Date of revision: Oct 1998
Handle: RePEc:gla:glaewp:9805
Contact details of provider: Postal: Adam Smith Building, Glasgow G12 8RT
Phone: 0141 330 4618
Fax: 0141 330 4940
Web page: http://www.gla.ac.uk/schools/business/research/
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