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The Procyclical Behavior of Total Factor Productivity in the United States, 1890–2004

Published online by Cambridge University Press:  01 June 2010

Alexander J. Field
Alexander J. Field*
Affiliation:
Michel and Mary Orradre Professor of Economics, Department of Economics, Santa Clara University, Santa Clara, CA 95053. E-mail: [email protected].
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Abstract

Between 1890 and 2004 total factor productivity (TFP) growth in the United States has been strongly procyclical, while labor productivity growth has been mildly so. This article argues that these results are not simply a statistical artifact, as Mathew Shapiro and others have argued. Procyclicality resulted principally from demand shocks interacting with capital services which are relatively invariant over the cycle. This account contrasts with explanations emphasizing labor hoarding as well as those offered by the real business cycle (RBC) program, in which TFP shocks (deviations from trend) are themselves the cause of cycles.

Type
ARTICLES
Information
The Journal of Economic History , Volume 70 , Issue 2 , June 2010 , pp. 326 - 350
Copyright
Copyright © The Economic History Association 2010

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