Abstract: Labor productivity is frequently thought to be informative with regard to inflation and it is often mentioned in discussions about the conduct of monetary policy. However, productivity growth – a mixture of low frequency trends, cyclical movements and short-term noise – is very volatile therefore difficult to interpret in real time. This paper considers why it may be helpful to keep track of productivity for monetary policy purposes and examines the possible use of financial indicators to get information about cyclical fluctuations in productivity growth in real time. Presented at the BIS economists ’ meeting on “Investigating the relationship between th
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