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Long-Run Productivity Shifts and Cyclical Fluctuations: Evidence for Italy
Author:
Ms. Silvia Sgherrinull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2005: Issue 228
Language:
English
Publication Date:
01 Dec 2005
DOI:
https://doi.org/10.5089/9781451862478.001
ISBN:
9781451862478
ISSN:
1018-5941
Pages:
37
Keywords:
WP
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2005: Issue 228