Aggregate Implications of Changing Sectoral Trends

Andrew T. Foerster, Andreas Hornstein, Pierre Daniel G. Sarte, Mark W. Watson

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

We describe how capital accumulation and the network structure of US production interact to amplify the effects of sectoral trend growth rates in total factor productivity and labor on trend GDP (gross domestic product) growth. We derive expressions that conveniently summarize this long-run amplification effect by way of sectoral multipliers. We estimate that sector-specific factors have historically accounted for approximately three-fourths of long-run changes in GDP growth. Trend GDP growth fell by nearly 3 percentage points over the postwar period, with especially significant contributions from the Construction sector in 1950–80 and the Durable Goods sector in 2000–2018. No sector has contributed any steady significant increase to the trend growth rate of GDP in the past 70 years.

Original languageEnglish (US)
Pages (from-to)3286-3333
Number of pages48
JournalJournal of Political Economy
Volume130
Issue number12
DOIs
StatePublished - Dec 1 2022
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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