Long-Run Productivity Shifts and Cyclical Fluctuations: Evidence for Italy

WPIEA2005228 Image
Price:  $15.00

Author/Editor: Silvia Sgherri
Release Date: © December, 2005
ISBN : 978-1-45186-247-8
Stock #: WPIEA2005228
Stock Status: On back-order

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Using unobserved stochastic components and Kalman filter techniques, the paper assesses the relative importance of transitory and permanent shifts in Italian real GDP within a production function framework. Evidence suggests that the increase in hours worked that has accompanied pension and labor market reforms accounts for the bulk of low-frequency variation in growth, but points to factor utilization as the main driver of business cycle fluctuations. In contrast with the predictions of standard Real Business Cycle models, a positive shock to the underlying rate of total factor productivity growth generates a slight decline in hours, whereas the response of output to the same shock is found to be positive.


Business cycles , Economic development

More publications in this series: Working Papers

More publications by: Silvia Sgherri