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Why did UK manufacturing productivity growth slow down in the 1970s and speed up in the 1980s

  • Gavin Cameron

After a dramatic slowdown of the 1970s, productivity growth in UK manufacturing in the 1980s returned to something like its pre-slowdown trend. This paper constructs a quarterly dynamic model of TFP growth in UK manufacturing using cointegration techniques, correcting for a variety of measurement biases. The elasticity of output with respect to R&D capital is estimated at between 0.2 and 0.3, with human capital also playing a positive and significant role. The paper also determines how much of the UK productivity slowdown in the 1970s was due to the mis-measurement of output and the business cycle and how much was due to structural changes. The answer appears to be about half and half.

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File URL: http://www.nuff.ox.ac.uk/economics/papers/1999/w24/CH3.pdf
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 1999-W24.

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Date of creation: 01 Aug 1999
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Handle: RePEc:oxf:wpaper:1999-w24
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  2. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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  10. Cameron, G. & Proudman, J. & Redding, S., 1998. "Deconstructing Growth in UK Manufacturing," Papers 28, Centre for Economic Performance & Institute of Economics.
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  15. Gavin Cameron, 1996. "On the measurement of real R&D: Divisia price indices for UK business enterprise R&D," Research Evaluation, Oxford University Press, vol. 6(3), pages 215-219, December.
  16. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
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  19. Ulph, A. M. & Ulph, D. T., 1994. "Labour markets and innovation: Ex-post bargaining," European Economic Review, Elsevier, vol. 38(1), pages 195-210, January.
  20. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
  21. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
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