Productivity Growth and the Structure of the Business Cycle

Gilles Saint-Paul

No 709, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Over recent years `opportunity cost' (OC) models of growth have been constructed which suggest that firms take advantage of the possibility of intertemporal subsitution in order to engage in productivity-improving activities during recessions. This paper tests whether this argument is correct, using a semi-structural vector autoregression to distinguish the trend from the cycle. The results are mildly supportive of the OC theory. Demand shocks tend to have a negative impact on productivity, both in the short and long run, and the short-run impact is stronger in those countries where fluctuations are more transitory. There is no evidence, however, of a significant R&D response to demand shocks.

Keywords: Business Cycles; Growth; Productivity; Research and Development (search for similar items in EconPapers)
JEL-codes: D21 D24 D92 E22 E23 (search for similar items in EconPapers)
Date: 1992-10
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Productivity growth and the structure of the business cycle (1993)
Working Paper: Productivity growth and the Structure of the Business Cycle (1992)
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