Premium
Are long‐run output growth rates falling?
Author(s) -
Li Mengheng,
MendietaMuñoz Ivan
Publication year - 2020
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12275
Subject(s) - economics , endogeneity , econometrics , slowdown , volatility (finance) , growth rate , okun's law , macroeconomics , keynesian economics , monetary economics , unemployment rate , unemployment , mathematics , economic growth , geometry
This paper studies the evolution of long‐run output and technical progress growth rates in the G‐7 countries during the post‐war period by considering the concept of the natural rate of growth. We use time‐varying parameter models that incorporate both stochastic volatility and a Heckman‐type two‐step estimation procedure that deals with the possible endogeneity problem in the econometric models. Our results show a significant decline in long‐run growth rates that is not associated with the detrimental effects of the Great Recession, and that the rate of growth of technical progress appears to be behind the slowdown in long‐run GDP growth.