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Productivity and GDP: International Evidence of Persistence and Trends Over 130 Years of Data

Author

Listed:
  • Luis A. Gil-Alana

    (University of Navarra, Pamplona, Spain)

  • Sakiru Adebola Solarin

    (University of Notthingham Malaysia, Malaysia)

  • Rangan Gupta

    (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)

Abstract

The degree of persistence of the real gross domestic product per capita, total factor productivity and labour productivity has been examined in a group of 23 developed and developing nations, as well as the overall Euro Area, by evaluating the order of integration of the macroeconomic series over the annual period from 1890 to 2019. As against the conventional use of using integer degrees of differentiation (i.e., 0 for stationarity and 1 in case of unit roots), fractional values have been utilized. The empirical findings suggest evidence for mean reversion in both total factor productivity and the real gross domestic product per capita in Chile, Germany, Netherlands and New Zealand. The results further suggest that mean reversion only occur in labour productivity of Australia. The non-linearity analysis shows that non-linearity in the three series occur only in the U.S and occurs in two of the three series in Chile, Spain and Mexico. The policy implications of the results are enumerated in the body of the paper.

Suggested Citation

  • Luis A. Gil-Alana & Sakiru Adebola Solarin & Rangan Gupta, 2021. "Productivity and GDP: International Evidence of Persistence and Trends Over 130 Years of Data," Working Papers 202170, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:202170
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    Keywords

    Productivity; GDP; persistence; long memory; fractional integration;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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