Growth, Slowdowns, and Recoveries

Howard Kung and Francesco Bianchi
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Howard Kung: London Business School

No 1073, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: We construct and estimate a model that features endogenous growth and technology diffusion. The spillover effects from research and development provide a link between business cycle fluctuations and long-term growth. Therefore, productivity growth is related to the state of the economy. Shocks to the marginal efficiency of investment explain the bulk of the low-frequency variation in growth rates. Transitory inflationary shocks lead to persistent declines in economic growth. During the Great Recession, technology diffusion dropped sharply, while long-term growth was not significantly affected. The opposite occurred during the 2001 recession. The growth mechanism induces positive comovement between consumption and investment.

Date: 2015
New Economics Papers: this item is included in nep-dge, nep-fdg, nep-gro and nep-mac
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Related works:
Journal Article: Growth, slowdowns, and recoveries (2019)
Working Paper: Growth, Slowdowns, and Recoveries (2014)
Working Paper: Growth, Slowdowns, and Recoveries (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:1073

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