Economics Seminar: Structural Change and Slow-Motion Recoveries

When?

Thursday 14 April 2011, 16:30 to 17:30

Where?

40AD00

Open to:

Staff, Public, Students

Speaker:

Alessio Moro (University of Cagliari)

Alessio Moro (University of Cagliari)

"Structural Change and Slow-Motion Recoveries" (with Vasco M. Carvalho)

Abstract

We explore the hypothesis that the appearance of slow-motion recoveries in the US economy since 1991 - i.e. slow growth phases following the end of recent recessions - can be attributed to the process of structural change between manufacturing and services. We start by providing novel evidence that shows
that strong bouncebacks from recessions are strongly evident in manufacturing but not in the services sector. We then develop a formal two-sector model of structural change, where technology shocks to the two different production technologies - goods manufacturing and services - induce different GDP growth patterns
following a recession. We show that in this framework, structural change towards services can endogenously generate a vanishing hump-shaped pattern of GDP growth rates over the cycle.