Trend TFP Growth in the United States: Forecasts versus Outcomes

Nicholas Crafts and Terence Mills

No 12029, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyze TFP growth in the U.S. business sector using a basic unobserved component model where trend growth follows a random walk and the noise is a first-order auto-regression. This is fitted using a Kalman-filter methodology. We find that trend TFP growth has declined steadily from 1.5 per cent to 1.0 per cent per year over the last 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 secular stagnationists simple because recent TFP growth has been weak.

Keywords: Productivity slowdown; Secular stagnation; Tfp growth (search for similar items in EconPapers)
JEL-codes: E32 N12 O47 (search for similar items in EconPapers)
Date: 2017-05
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (3)

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