Identifying the sources of the slowdown in growth : demand vs. supply

Nicolò Maffei-Faccioli

Long-run GDP growth has declined in the United States over the past two decades. Two competing views take the stage in accounting for this slowdown: demand-side and supply-side. I empirically quantify their relative importance in a Bayesian SVAR with common trends, identified using sign restrictions based on the co-movement of prices and quantities. While supply-side factors were the main driver of long-run GDP growth prior to 2000, demand-side factors explain half of its slowdown afterwards. The findings suggest a relevant role of demand forces as drivers of long-run growth.

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Year of publication:	[2021]
Authors:	Maffei-Faccioli, Nicolò
Publisher:	Oslo : Norges Bank
Subject:	Long-run growth \| Super-hysteresis \| SVAR \| VAR-Modell \| VAR model \| Wirtschaftswachstum \| Economic growth \| Schock \| Shock \| Gesamtwirtschaftliche Nachfrage \| Aggregate demand