1999-04 EC: The U.S. Productivity Slowdown: A Peak Through the Structural Break Window (working paper)
Dolmas, J., Raj, B., & Slottje, D.
published: 1999 | Research publication | Working Paper - Economics
ABSTRACT: This paper provides a formal test of the null hypothesis of a unit root in the log-level of labor productivity against the alternative of linear trend stationarity with a one-time structural break in the level and slope of the trend at an a priori unknown point in time. Using some newly developed time series tests, we show that the log-level of productivity is more accurately modeled as following a deterministic trend with a regime shift rather than as a unit root process. Some implications of the results for detrending the series and for testing cointegration relationships between productivity and other related economic variables are discussed.
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