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Tracking the slowdown in long-run GDP growth

Antolin-Diaz, Juan, Drechsel, Thomas and Petrella, Ivan (2017) Tracking the slowdown in long-run GDP growth. Review of Economics and Statistics, 99 (2). pp. 343-356. ISSN 0034-6535

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Identification Number: 10.1162/REST_a_00646


Using a dynamic factor model that allows for changes in both the long-run growth rate of output and the volatility of business cycles, we document a significant decline in long-run output growth in the United States. Our evidence supports the view that most of this slowdown occurred prior to the Great Recession. We show how to use the model to decompose changes in long-run growth into its underlying drivers. At low frequencies, a decline in the growth rate of labor productivity appears to be behind the recent slowdown in GDP growth for both the United States and other advanced economies. When applied to real-time data, the proposed model is capable of detecting shifts in long-run growth in a timely and reliable manner.

Item Type: Article
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Additional Information: © 2017 President and Fellows of Harvard College and the Massachusetts Institute of Technology
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HC Economic History and Conditions
Date Deposited: 21 Jun 2017 11:18
Last Modified: 04 Jul 2024 01:24

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