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Identifying the Sources of the Slowdown in Growth: Demand vs. Supply

Nicolò Maffei-Faccioli ()

2020 Papers from Job Market Papers

Abstract: This paper proposes an empirical approach to identify the structural forces behind the recent slowdown in US GDP growth. I use time series techniques to extract low-frequency fluctuations in GDP growth and inflation and identify their underlying drivers: demand and supply. Identification is achieved with a set of sign restrictions. While supply-side factors account entirely for the slowdown in trend GDP growth during the 1970s and its acceleration in the 1990s, ``super-hysteresis" effects explain half of its decline since 2000. Overall, this paper establishes an important role of demand factors as drivers of long-run GDP growth.

JEL-codes: C32 E3 O47 (search for similar items in EconPapers)
Date: 2020-10-19
New Economics Papers: this item is included in nep-mac
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