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Accounting for Canada's Economic Growth: A GE Approach

Author

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  • Carlaw, K.
  • Kosempel, S.

Abstract

A dynamic stochastic general equilibrium model is constructed and calibrated to the Canadian economy. Technology disturbances from the Canadian economy are filtered through the model and used to generate artificial time series. Output growth in the model is then decomposed into the share weighted growth rates of the factor inputs and productivity. The model is then used to identify the endogenous responses of the factor inputs to the technology disturbances. The results suggest that much of the slowdown observed in Canadian output growth since 1974 can be explained by fluctuations in the rates of investment-specific and residual-neutral technological change.

Suggested Citation

  • Carlaw, K. & Kosempel, S., 2001. "Accounting for Canada's Economic Growth: A GE Approach," Working Papers 2001-1, University of Guelph, Department of Economics and Finance.
  • Handle: RePEc:gue:guelph:2001-1
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    File URL: http://www.uoguelph.ca/economics/repec/workingpapers/2001/2001-01.pdf
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    References listed on IDEAS

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    1. Mehra, Rajnish & Prescott, Edward C., 1985. "The equity premium: A puzzle," Journal of Monetary Economics, Elsevier, vol. 15(2), pages 145-161, March.
    2. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 2000. "The role of investment-specific technological change in the business cycle," European Economic Review, Elsevier, vol. 44(1), pages 91-115, January.
    3. Marianne Baxter & Robert G. King, 1999. "Measuring Business Cycles: Approximate Band-Pass Filters For Economic Time Series," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 575-593, November.
    4. Finn E. Kydland, 1993. "Business cycles and aggregate labor-market fluctuations," Working Paper 9312, Federal Reserve Bank of Cleveland.
    5. Christiano, Lawrence J & Eichenbaum, Martin, 1992. "Current Real-Business-Cycle Theories and Aggregate Labor-Market Fluctuations," American Economic Review, American Economic Association, vol. 82(3), pages 430-450, June.
    6. David, P.A., 1989. "Computer And Dynamo: The Modern Productivity Paradox In A Not-Too Distant Mirror," The Warwick Economics Research Paper Series (TWERPS) 339, University of Warwick, Department of Economics.
    7. Carlaw, K. & Kosempel, S., 2000. "The Sources of Productivity Growth in Canada," Working Papers 2000-9, University of Guelph, Department of Economics and Finance, revised 2003.
    8. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-362, June.
    9. Mendoza, Enrique G, 1991. "Real Business Cycles in a Small Open Economy," American Economic Review, American Economic Association, vol. 81(4), pages 797-818, September.
    10. Gary D. Hansen & Randall Wright, 1992. "The labor market in real business cycle theory," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 2-12.
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    Citations

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    Cited by:

    1. Carlaw, K. & Kosempel, S., 2000. "The Sources of Productivity Growth in Canada," Working Papers 2000-9, University of Guelph, Department of Economics and Finance, revised 2003.
    2. Kosempel, Stephen, 2004. "A theory of development and long run growth," Journal of Development Economics, Elsevier, vol. 75(1), pages 201-220, October.

    More about this item

    Keywords

    Total factor productivity ; investment-specific technology ; growth accounting;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • 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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