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Why has the cyclicality of productivity changed? What does it mean?

John Fernald () and J. Christina Wang

No 2016-7, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: U.S. labor and total factor productivity have historically been procyclical—rising in booms and falling in recessions. After the mid-1980s, however, TFP became much less procyclical with respect to hours while labor productivity turned strongly countercyclical. We find that the key empirical “fact” driving these changes is reduced variation in factor utilization—conceptually, the workweek of capital and labor effort. We discuss a range of theories that seek to explain the changes in productivity’s cyclicality. Increased flexibility, changes in the structure of the economy, and shifts in relative variances of technology and “demand” shocks appear to play key roles.

JEL-codes: E22 E23 E32 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-lma and nep-mac
Date: 2016-04-01
Note: This version: December 2015
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Related works:
Journal Article: Why Has the Cyclicality of Productivity Changed? What Does It Mean? (2016) Downloads
Working Paper: Why Has the Cyclicality of Productivity Changed? What Does It Mean? (2016) Downloads
Working Paper: Why has the cyclicality of productivity changed?: what does it mean? (2015) Downloads
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