Productivity growth recovery mechanisms: an ARDL approach lessons from the United States, Japan and South Korea

Koczyrkewycz, Michael, Chaiechi, Taha, and Beg, Rabiul (2021) Productivity growth recovery mechanisms: an ARDL approach lessons from the United States, Japan and South Korea. Bulletin of Applied Economics, 8 (2). pp. 163-184.

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Abstract

Productivity growth is an essential ingredient for achieving long-term economic growth and sustainable development. In the absence of such growth, economic growth is not achievable. Accordingly, this paper examines economic resilience through multiple productivity channels within the United States, Japan and South Korea. Adopting a Kaleckian post-Keynesian approach, productivity growth is constructed as a function of investment, capacity utilisation, indicators of financial development, and an indicator of fiscal policy. Utilising annual historical data from 1980-2019, this paper adopts Autoregressive Distributed Lag (ARDL) models, Vector Autoregressive-based Impulse Response Functions (IRF) and Variance Decompositions (VD) to examine the resilience of productivity growth through the speeds of adjustment after an external shock. Results show that long and short-run unidirectional causality between productivity growth and the explanatory variables exists amongst all economies through the errorcorrection terms (ECT) and ARDL models. When imposing a simulated one-time S.D. shock upon the explanatory variables, differing speeds of adjustment and recovery processes in the long-run are present. As such, the strength of causal relationships amongst productivity growth and the explanatory variables ultimately affects speeds of adjustment and hence recovery.

Item ID: 69304
Item Type: Article (Research - C1)
ISSN: 2056-3736
Keywords: Economic Resilience, Productivity Growth, Kaleckian post-Keynesian, Autoregressive Distributed Lag (ARDL), Impulse Response Functions (IRF), Variance Decomposition (VD)
Copyright Information: For all articles published in BAE, copyright is retained by the authors. Articles are licensed under an open access Creative Commons CC BY 4.0 license, meaning that anyone may download and read the paper for free. In addition, the article may be reused and quoted provided that the original published version is cited. These conditions allow for maximum use and exposure of the work, while ensuring that the authors receive proper credit.
Date Deposited: 29 Sep 2021 04:40
FoR Codes: 38 ECONOMICS > 3802 Econometrics > 380205 Time-series analysis @ 50%
38 ECONOMICS > 3803 Economic theory > 380302 Macroeconomic theory @ 50%
SEO Codes: 15 ECONOMIC FRAMEWORK > 1502 Macroeconomics > 150203 Economic growth @ 60%
15 ECONOMIC FRAMEWORK > 1502 Macroeconomics > 150299 Macroeconomics not elsewhere classified @ 40%
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