Trend TFP Growth in the United States: Forecasts versus Outcomes
Trend TFP Growth in the United States: Forecasts versus Outcomes
economic history, working papers
National Institute Economic Review
https://doi.org/10.1177/002795011724200115
329/2017 Nicholas Crafts and Terence C. Mills
We analyse TFP growth in the U.S. business sector using a basic unobserved component model where trend growth follows a random walk and the noise is a first order autoregression. This is fitted using a Kalman-filter methodology. We find that trend TFP growth has declined steadily from 1.5 to 1.0 per cent per year over the last 50 years. Nevertheless, recent trends are not a good guide to actual medium-term TFP growth. This exhibits substantial variations and is quite unpredictable. Techno-optimists should not give best to secular stagnationists simply because recent TFP growth has been weak
Economic History
National Institute Economic Review
https://doi.org/10.1177/002795011724200115