Revisions in Utilization-Adjusted TFP and Robust Identification of News Shocks

André Kurmann and Eric Sims ()

No 2017-3, School of Economics Working Paper Series from LeBow College of Business, Drexel University

Abstract: This paper documents large revisions in a widely-used series of utilization-adjusted total factor productivity (TFP) by Fernald (2014) and shows that these revisions can materially affect empirical conclusions about the macroeconomic effects of news shocks. We propose an alternative identification that is robust to measurement issues with TFP, including the revisions in Fernald's series. When applied to U.S. data, the shock predicts sustained future productivity growth while simultaneously generating strong impact responses of novel indicators of technological innovation and forward-looking information variables. The shock does, however, not lead to comovement in macroeconomic aggregates as typically associated with business cycle fluctuations.

Keywords: Total factor productivity; variable utilization; news shocks (search for similar items in EconPapers)
JEL-codes: E22 E23 E32 O47 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2017-01-27
New Economics Papers: this item is included in nep-eff and nep-mac
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Citations: View citations in EconPapers (25)

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Related works:
Journal Article: Revisions in Utilization-Adjusted TFP and Robust Identification of News Shocks (2021)
Working Paper: Revisions in Utilization-Adjusted TFP and Robust Identification of News Shocks (2017)
Working Paper: Revisions in Utilization-Adjusted TFP and Robust Identification of News Shocks (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:drxlwp:2017_003

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