Identifying the sources of the slowdown in growth: Demand vs. supply

Nicolò Maffei-Faccioli

No 2021/9, Working Paper from Norges Bank

Abstract: Long-run GDP growth has declined in the United States over the past two decades. Two competing views take the stage in accounting for this slowdown: demand-side and supply-side. I empirically quantify their relative importance in a Bayesian SVAR with common trends, identified using sign restrictions based on the co-movement of prices and quantities. While supply-side factors were the main driver of long-run GDP growth prior to 2000, demand-side factors explain half of its slowdown afterwards. The findings suggest a relevant role of demand forces as drivers of long-run growth.

Keywords: long-run growth; super-hysteresis; SVAR (search for similar items in EconPapers)
JEL-codes: C32 E3 O47 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2021-09-20
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:bno:worpap:2021_9

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