Driving forces of the Canadian economy: an accounting exercise

Simona Cociuba () and Alexander Ueberfeldt

No 6, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: This paper analyzes the Canadian economy for the post-1960 period. It uses an accounting procedure developed in Chari, Kehoe, and McGrattan (2006). The procedure identifies accounting factors that help align the predictions of the neoclassical growth model with macroeconomic variables observed in the data. The paper finds that total factor productivity and the consumption-leisure trade-off?the productivity and labor factors?are key to understanding the changes in output, labor supply and labor productivity observed in the Canadian economy. The paper performs a decomposition of the labor factor for Canada and the United States. It finds that the decline in the gender wage gap is a major driving force of the decrease in the labor market distortions. Moreover, the milder reduction in the labor market distortions observed in Canada, compared to the U.S., is due to a relative increase in effective labor taxes in Canada.

Keywords: Economic conditions - Canada; Productivity - Canada; Labor productivity; Labor supply (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-dge and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: Driving Forces of the Canadian Economy: An Accounting Exercise (2008)
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