The Interaction between Business Cycles and Productivity Growth

Evidence from US Industrial Data
  • James R. Malley
  • V. Anton Muscatelli
  • Ulrich Woitek
Chapter

Abstract

In this paper, we employ total factor productivity data adjusted for factor utilisation over the cycle, to model the dynamic interaction between TFP and employment. Our data spans twenty 2-digit SIC code manufacturing sectors in the US. There are two key results. First, we show that the impact of technology shocks on employment cycles is much weaker than suggested by real business cycle-type models, and that in a number of cases employment responds negatively to technology shocks. Second, in examining the impact of employment shocks on TFP, we find some evidence for both opportunity cost and learning-by-doing effects.

Key words

Manufacturing Total Factor Productivity Growth Business cycles Opportunity cost Learning by doing 
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Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  • James R. Malley
    • 1
  • V. Anton Muscatelli
    • 1
  • Ulrich Woitek
    • 1
  1. 1.University of GlasgowUK

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