Growth Accounting and the Business Cycle for the Private Business Sectors of the Swedish Economy (1963 – 1999)
||Barot, Bharat; Lundvik, Petter
||Growth Accounting and the Business Cycle for the Private Business Sectors of the Swedish Economy (1963 – 1999)
||8th European Real Estate Society Conference (26-29 June 2001) Alicante, Spain
||This paper is concerned with the nature of economic growth in the nine sectors of private business in the Swedish economy for the sample period 1963-1999. The results of the study indicate that there is substantial heterogeneity (across both sectors and time) in rates of value-added, hours worked, labour productivity and Total Factor Productivity (TFP) during the sample period. The decline in value-added in the private business sector, when measured with constant prices during the sample period is associated with significant changes in the relative size of individual sectors. The growth accounting exercise for six different sub periods reveals a decline in TFP after (1960-1969) i.e. the end of the postwar "golden era" due to two oil shocks from 1973-1979. In the 1980s TFP accelerated but only to slowdown again at the beginning of the 1990s. After the first half of 1990s, TFP increased for the manufacturing, wholesale and retail trade, banking, goods and service producing sectors and the private business sector. While TFP has accelerated during the second half of the 1990s due to the recovery from the recession of the early 1990s, it is unclear to what extent this change is primarily cyclical or structural. Separating cycle from trend is always difficult in the midst of an expansion, and it is particularly challenging now because the current expansion is tending to conform to cyclical norms. For the sake of comparison with the real business cycle literature we use the standard practice of taking logs and Hodrick-Prescott filtering the data. Cross correlations of detrended output, hours, investment and TFP at different leads and lags indicate that TFP leads investment, and hours worked and TFP and GDP for all the sectors is procyclical. Hence the decomposition of TFP into trend and cyclical component gives reasonable results. Chow tests with a dynamic specification of TFP growth rates for the private business sectors of the economy indicates structural breaks for agriculture and construction in 1973, 1980, 1986 1987, and 1988 for electricity and construction in 1992, and for the banking real estate and other businesses, manufacturing, and community services in 1993. Granger causality tests indicate that TFP in the banking and real estate sector Granger causes TFP in the agriculture, manufacturing, and transport sectors. Simple cross correlations indicate that TFP, hours worked and the share going to capital are procyclical while capital stocks and the share going to labour are countercyclical.
||growth accounting, labour productivity, Total Factor Prodictivity, growth dynamics , granger causality, stability, crosses correlations
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||Housing Market equilibrium
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