TY  - JOUR
AU  - Shapiro,Matthew D.
TI  - Are Cyclical Fluctuations in Productivity Due More to Supply Shocks or Demand Shocks?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2147
PY  - 1989
Y2  - May 1989
UR  - http://www.nber.org/papers/w2147
L1  - http://www.nber.org/papers/w2147.pdf
N1  - Author contact info:
Matthew D. Shapiro
Department of Economics
University of Michigan
611 Tappan St
Ann Arbor, MI 48109-1220
Tel: 734/764-5419
Fax: 734 764-2769
E-Mail: shapiro@umich.edu
AB  - Measured productivity is strongly procyclical. Real business cycle theories suggest that actual fluctuations in productivity are the source of fluctuations in aggregate output. Keynesian theories maintain that fluctuations in aggregate output come from shocks to aggregate demand. Keynesian theories appeal to labor hoarding or off the production function behavior to explain the procyclicality of productivity. If observed productivity shocks are true productivity shocks, a function of factor prices should covary exactly with productivity. In annual data for U.S. industries, that function of factor prices and conventionally-measured productivity move together very closely. Moreover, their difference is uncorrelated with aggregate output.
ER  -