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

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  • Jim Malley
  • Anton Muscatelli
  • Ulrich Woitek

Abstract

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.

Suggested Citation

  • Jim Malley & Anton Muscatelli & Ulrich Woitek, 1998. "The Interaction Between Business Cycles and Productivity Growth: Evidence from US Industrial Data," Working Papers 9805, Business School - Economics, University of Glasgow, revised Oct 1998.
    • Handle: RePEc:gla:glaewp:9805
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    Cited by:

    1. Jim Malley & Anton Muscatelli & Ulrich Woitek, 2000. "New International Comparisons Of Productivity Performance: A Sectoral Analysis And A Comparison Of Uk Performance," Working Papers 2000_17, Business School - Economics, University of Glasgow.
    2. Malley, James R. & Muscatelli, V. Anton & Woitek, Ulrich, 2005. "Real business cycles, sticky wages or sticky prices? The impact of technology shocks on US manufacturing," European Economic Review, Elsevier, vol. 49(3), pages 745-760, April.
    3. Miguel Jimenez & Domenico Marchetti, 2002. "Interpreting the procyclical productivity of manufacturing sectors: can we really rule out external effects?," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 805-817.
    4. Jim Malley & Anton Muscatelli & Ulrich Woitek, 1999. "Real Business Cycles or Sticky Prices? The Impact of Technology Shocks on US Manufacturing," Working Papers 1999_15, Business School - Economics, University of Glasgow.
    5. Miguel Jimenez & Domenico J. Marchetti, 2000. "Interpreting the Procyclical Productivity of Manufacturing Sectors: Can We Really Rule Out External Effects:," Econometric Society World Congress 2000 Contributed Papers 1319, Econometric Society.
    6. Thorsten Proettel & Jochen Streb & Sabine Streb, 2009. "Die Produktivitätsentwicklung in der deutschen Stromwirtschaft in langfristiger Perspektive," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(3), pages 309-332, August.

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    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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