Productivity and U.S. macroeconomic performance: interpreting the past and predicting the future with a two-sector real business cycle model

Ireland, Peter; Schuh, Scott

Productivity and U.S. macroeconomic performance: interpreting the past and predicting the future with a two-sector real business cycle model

Peter Ireland and Scott Schuh

No 06-10, Working Papers from Federal Reserve Bank of Boston

Abstract: A two-sector real business cycle model, estimated with postwar U.S. data, identifies shocks to the levels and growth rates of total factor productivity in distinct consumption- and investment-goods- producing technologies. This model attributes most of the productivity slowdown of the 1970s to the consumption-goods sector; it suggests that a slowdown in the investment-goods sector occurred later and was much less persistent. Against this broader backdrop, the model interprets the more recent episode of robust investment and investment-specific technological change during the 1990s largely as a catch-up in levels that is unlikely to persist or be repeated anytime soon.

Keywords: Business cycles; Productivity (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-dge, nep-eff and nep-mac
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Citations: View citations in EconPapers (1)

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