The Stationary of Productivity Shocks: Evidence from 25 OECD and Big-7 Countries

Aviral Tiwari, Faridul Islam (), Suleyman Bolat, Phouphet Kyophilavong and Byoungki Kim
Additional contact information
Suleyman Bolat: Department of Public Finance, Faculty of Economics and Administrative Sciences, Aksaray University, Turkey
Byoungki Kim: Faculty of Economics, Graduate School, Shiga University, Japan

International Journal of Economics and Financial Issues, 2017, vol. 7, issue 1, 613-618

Abstract: We apply the panel covariate augmented Dickey Fuller test to test stationarity of the productivity series for the OECD and Big-7 economies. The approach takes cross-sectional dependence into account. Using hours-worked per worker, we find that the series is non-stationary for the 25 OECD countries; but for the Big-7 the results are mixed. So, this paper achieves a battery of panel unit root tests to examine the stationarity properties of the series named hours worked per employee. The study period covers 1960-2012 for the OECD and the Big-7 countries. The tests we use account for cross-sectional dependence and those that do not account for such dependence. Our results suggest that an analyst might infer that hours worked fall after a positive technology shock, when it may go up in a true data-generating process. The findings also suggest that although in a true data-generating process, the series may go up from a positive technology shock, analysts may infer a fall. The stationarity of the series is relevant in determining the effect of positive technology shock on productivity.

Keywords: Productivity Shock; Panel Unit Root; Cross-sectional Dependence; OECD and Big-7 Countries (search for similar items in EconPapers)
JEL-codes: C22 C23 J22 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.econjournals.com/index.php/ijefi/article/view/3781/pdf (application/pdf)
http://www.econjournals.com/index.php/ijefi/article/download/3781/pdf (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2017-01-77

Access Statistics for this article

International Journal of Economics and Financial Issues is currently edited by Ilhan Ozturk

More articles in International Journal of Economics and Financial Issues from Econjournals
Bibliographic data for series maintained by Ilhan Ozturk ().