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A univariate model of aggregate labour productivity

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  • Robert Dixon
  • G. C. Lim

Abstract

In this article, we set out a model of labour productivity which distinguishes between shocks which change productivity permanently and shocks which have transient affects on productivity. We show that this model is a type of unobserved components model -- a random walk with drift plus noise model. The advantage of this approach is that it provides a coherent framework to identify the deterministic trend growth component and also the productivity enhancing (or technology related) stochastic components. The model is applied to aggregate labour productivity in Australia and the time series of technology shocks extracted is used to shed some light on the contributions of policy reforms to productivity.

Suggested Citation

  • Robert Dixon & G. C. Lim, 2012. "A univariate model of aggregate labour productivity," Applied Economics, Taylor & Francis Journals, vol. 44(16), pages 2075-2080, June.
    • Handle: RePEc:taf:applec:44:y:2012:i:16:p:2075-2080
    DOI: 10.1080/00036846.2011.558481
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    References listed on IDEAS

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    1. Robert Dixon, 2003. "Trevor Swan on Equilibrium Growth with Technical Progress," The Economic Record, The Economic Society of Australia, vol. 79(247), pages 487-490, December.
    2. Dean Parham, 2004. "Sources of Australia's Productivity Revival," The Economic Record, The Economic Society of Australia, vol. 80(249), pages 239-257, June.
    3. Matthew D. Shapiro & Mark W. Watson, 1988. "Sources of Business Cycle Fluctuations," NBER Chapters, in: NBER Macroeconomics Annual 1988, Volume 3, pages 111-156, National Bureau of Economic Research, Inc.
    4. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
    5. Harvey, Andrew C. & Trimbur, Thomas M. & Van Dijk, Herman K., 2007. "Trends and cycles in economic time series: A Bayesian approach," Journal of Econometrics, Elsevier, vol. 140(2), pages 618-649, October.
    6. Oh, Kum Hwa & Zivot, Eric & Creal, Drew, 2008. "The relationship between the Beveridge-Nelson decomposition and other permanent-transitory decompositions that are popular in economics," Journal of Econometrics, Elsevier, vol. 146(2), pages 207-219, October.
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    1. Barros, Geraldo Sant´Ana de Camargo & Spolador, Humberto Francisco Silva & Bacchi, Mirian Rumenos Piedade, 2009. "Supply and Demand Shocks and the Growth of the Brazilian Agriculture," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 63(1), April.

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