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Long-Run Productivity Shifts and Cyclical Fluctuations; Evidence for Italy

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  • Silvia Sgherri

Abstract

Using unobserved stochastic components and Kalman filter techniques, the paper assesses the relative importance of transitory and permanent shifts in Italian real GDP within a production function framework. Evidence suggests that the increase in hours worked that has accompanied pension and labor market reforms accounts for the bulk of low-frequency variation in growth, but points to factor utilization as the main driver of business cycle fluctuations. In contrast with the predictions of standard Real Business Cycle models, a positive shock to the underlying rate of total factor productivity growth generates a slight decline in hours, whereas the response of output to the same shock is found to be positive.

Suggested Citation

  • Silvia Sgherri, 2005. "Long-Run Productivity Shifts and Cyclical Fluctuations; Evidence for Italy," IMF Working Papers 05/228, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:05/228
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    Citations

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    Cited by:

    1. Tatiana Cesaroni & Carmine Pappalardo, 2008. "Long run and short run dynamics in italian manufacturing labour productivity," Economics Bulletin, AccessEcon, vol. 3(15), pages 1-11.
    2. Calcagnini, Giorgio & Travaglini, Giuseppe, 2014. "A time series analysis of labor productivity. Italy versus the European countries and the U.S," Economic Modelling, Elsevier, vol. 36(C), pages 622-628.
    3. Bogdan Lissovolik, 2008. "Trends in Italy’s Nonprice Competitiveness," IMF Working Papers 08/124, International Monetary Fund.

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