The Italian productivity slowdown in a Real Business Cycle perspective

Francesca Marino ()
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Francesca Marino: University of Bari "Aldo Moro

No 46, SERIES from Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro"

Abstract: This paper investigates the structural relation between the italian weak macroeco- nomic performances and the productivity decline experienced over the last Öfteen years, estimating a Dynamic Stochastic General Equilibrium (DSGE) model. Modifying Ire- land and SchuhiÌ s (2008) two-sector RBC model in order to account for cointegration between consumption and investment, we interpret the unsatisfactory italian economic dynamics in light of a permanent negative shock to the component of productivity which is common across the consumption-good and the investment-good sector. In light of our results, the common view that the italian productivity problems involve only the Made in Italy sectors is only partially conÖrmed, since growth in the investment- good sector relies on the counterbalancing properties of its transitory sector-speciÖc productivity component. Moreover, the model indirectly stresses the importance of the intermediate-good productions in the observed productivity decline. The short and long-run implications of productivity dynamics for the consumption, investment and hours worked are also brieaÌ y discussed.

Keywords: Real Business Cycle model; italian productivity slowdown; structural approach (search for similar items in EconPapers)
JEL-codes: E32 O41 (search for similar items in EconPapers)
Pages: 277
Date: 2013-04, Revised 2013-04
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