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

 
Author/Editor: Sgherri, Silvia
 
Publication Date: December 01, 2005
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: 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.
 
Series: Working Paper No. 05/228
Subject(s): Productivity | Italy | Business cycles | Economic models

Author's Keyword(s): Productivity growth | business cycle | unobserved components models | filtering.
 
English
Publication Date: December 01, 2005
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2005228 Pages: 37
Price:
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