Abstract:

Underlying labor-productivity growth is estimated for each of the G7 countries over the last two decades. Underlying productivity is proxied by a stochastic trend, which is estimated using the Kalman filter. This technique allows the data to determine when changes in growth have occurred and is therefore less ad hoc than the split trends or dummies normally used. The results show that the decline in underlying productivity growth in the 1970s was far from uniform across countries. While relat...

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