A univariate model of aggregate labour productivity

Robert Dixon and Guay Lim

Applied Economics, 2012, vol. 44, issue 16, 2075-2080

Abstract: In this article, we set out a model of labour productivity which distinguishes between shocks which change productivity permanently and shocks which have transient affects on productivity. We show that this model is a type of unobserved components model -- a random walk with drift plus noise model. The advantage of this approach is that it provides a coherent framework to identify the deterministic trend growth component and also the productivity enhancing (or technology related) stochastic components. The model is applied to aggregate labour productivity in Australia and the time series of technology shocks extracted is used to shed some light on the contributions of policy reforms to productivity.

Date: 2012
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Journal Article: A univariate model of aggregate labour productivity (2012)
Working Paper: A Univariate Model of Aggregate Labour Productivity (2008)
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DOI: 10.1080/00036846.2011.558481

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