Economics at your fingertips  

Diffusion of Technical Change and the Decomposition of Output into Trend and Cycle

Marco Lippi () and Lucrezia Reichlin ()

Review of Economic Studies, 1994, vol. 61, issue 1, 19-30

Abstract: In this paper we argue that modelling the trend component in real GNP as a random walk is inconsistent with its interpretation as productivity growth. As an alternative, we specify the trend as an ARIMA whose impulse response function follows an S-shaped pattern reflecting the process of diffusion of technical change. Such an ARIMA is employed to build and estimate an UCARIMA using USA postwar quarterly data. We find that our model, although more parsimonious, fits the data equally well than the standard random walk plus AR(2) cycle. Moreover, our model has a very low cycle/trend variance ratio.

Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (47) Track citations by RSS feed

Downloads: (external link) (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Diffusion of technical change and the decomposition of output into trend and cycle (1994)
Working Paper: Diffusion of Technical Change and the Decomposition of Output into Trend and Cycle (1993) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Review of Economic Studies is currently edited by Andrea Prat, Bruno Biais, Kjetil Storesletten and Enrique Sentana

More articles in Review of Economic Studies from Oxford University Press
Bibliographic data for series maintained by Oxford University Press ().

Page updated 2019-08-22
Handle: RePEc:oup:restud:v:61:y:1994:i:1:p:19-30.