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- Predicting Medium-term TFP Growth In The United States: Econometrics Vs ‘techno-optimism’
Predicting medium-term TFP growth in the United States: econometrics vs ‘techno-optimism’
External Authors
Crafts, N
Mills, T C
Related Themes
Productivity, Trade, and Regional EconomiesJEL Code
E32, N12, O47
Journal
National Institute Economic Review
Publisher
Sage Publications, London
External Resources
http://journals.sagepub.com/doi/full/10.1177/002795011724200115
Issue
242
We analyse TFP growth in the US business sector using a basic unobserved component model where trend growth follows a random walk and the noise is a first order autoregression. This is fitted using a Kalman-filter methodology. We find that trend TFP growth has declined steadily from 1.5 to 1.0 per cent per year over the past 50 years. Nevertheless recent trends are not a good guide to actual medium-term TFP growth. This exhibits substantial variations and is quite unpredictable. Techno-optimists should not give best to productivity pessimists simply because recent TFP growth has been weak.
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