Total factor productivity and the propagation of shocks: Empirical evidence and implications for the business cycle
Eric Mayer (),
Sebastian Rüth () and
Journal of Macroeconomics, 2016, vol. 50, issue C, 335-346
Using a robust sign restrictions approach, we study the response of total factor productivity (TFP) to structural shocks in a VAR framework. We find that TFP increases in response to adverse supply, demand, and wage mark-up shocks. Results for monetary policy shocks are insignificant. Following an adverse technology shock and reductions in government spending, TFP declines. Overall, we conclude that TFP fluctuates endogenously over the business cycle, a feature of the data that is not present in standard DSGE models.
Keywords: TFP; Robust sign restrictions; Business cycle (search for similar items in EconPapers)
JEL-codes: E24 E32 E40 (search for similar items in EconPapers)
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Working Paper: Total Factor Productivity and the Propagation of Shocks; Empirical Evidence and Implications for the Business Cycle (2014)
Working Paper: Total factor productivity and the propagation of shocks: Empirical evidence and implications for the business cycle (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:50:y:2016:i:c:p:335-346
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