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Tracking the Slowdown in Long-Run GDP Growth

Juan Antolin-Diaz, Thomas Drechsel and Ivan Petrella

No 1604, Discussion Papers from Centre for Macroeconomics (CFM)

Abstract: Using a dynamic factor model that allows for changes in both the long-run growth rate of output and the volatility of business cycles, we document a significant decline in long-run output growth in the United States. Our evidence supports the view that most of this slowdown occurred prior to the Great Recession. We show how to use the model to decompose changes in long-run growth into its underlying drivers. At low frequencies, a decline in the growth rate of labor productivity appears to be behind the recent slowdown in GDP growth for both the US and other advanced economies. When applied to real-time data, the proposed model is capable of detecting shifts in long-run growth in a timely and reliable manner.

Keywords: Long-run Growth; Business Cycles; Productivity; Dynamic Factor Models; Real-time Data (search for similar items in EconPapers)
JEL-codes: C32 E01 E23 E32 O47 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2014-10, Revised 2016-01
New Economics Papers: this item is included in nep-eff, nep-fdg, nep-gro and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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http://www.centreformacroeconomics.ac.uk/Discussio ... MDP2016-04-Paper.pdf Revised version, 2016 (application/pdf)

Related works:
Journal Article: Tracking the Slowdown in Long-Run GDP Growth (2017) Downloads
Working Paper: Tracking the slowdown in long-run GDP growth (2017) Downloads
Working Paper: Tracking the slowdown in long-run GDP growth (2016) Downloads
Working Paper: Tracking the slowdown in long-run GDP growth (2016) Downloads
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