Kiel Working Papers, Kiel Institute for World Economics
No 1703:
A simple decomposition of the variance of output growth across countries
Christopher Reicher
Abstract: This paper outlines a simple regression-based method to
decompose the variance of an aggregate time series into the variance of its
components, which is then applied to measure the relative contributions of
productivity, hours per worker, and employment to cyclical output growth
across a panel of countries. Measured productivity contributes more to the
cycle in Europe and Japan than in the United States. Employment contributes
the largest proportion of the cycle in Europe and the United States (but
not Japan), which is inconsistent with the idea that higher levels of
employment protection in Europe dampen cyclical employment fluctuations
Keywords: Intensive margin, extensive margin, productivity, business cycles, variance decomposition; (follow links to similar papers)
JEL-Codes: C32,; E24,; E32; (follow links to similar papers)
7 pages, May 2011
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