Productivity, energy prices, and the Great Moderation: a new link

Rajeev Dhawan (), Karsten Jeske and Pedro Silos

No 2008-11, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: We study how total factor productivity (TFP), energy prices, and the Great Moderation are linked. First we estimate a joint stochastic process for the energy price and TFP and establish that until the second quarter of 1982, energy prices negatively affected productivity. This spillover has since disappeared. Second, we show that within the framework of a dynamic stochastic general equilibrium model, the disappearance of this energy-productivity spillover generates the significantly lower volatility of output and its components. Specifically, the change in the joint stochastic process accounts for close to 70 percent of the moderation in output volatility.

Keywords: Productivity (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-dge, nep-eff and nep-ene
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Productivity, Energy Prices and the Great Moderation: A New Link (2010)
Working Paper: Productivity, Energy Prices and the Great Moderation: A New Link (2008)
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