Abstract: In the second half of the 1990s, U.S. productivity growth moved up to rates not seen in several decades. In this paper, I use time-varying parameter techniques to isolate trend from cyclical movements in productivity and to obtain an estimate of the trend rate of productivity growth. I examine models both with and without an explicit role for capital accumulation. I find that in the models without an explicit role for capital accumulation, trend productivity growth is estimated to have moved up from around 1-1/2 percent in the period from the early 1970s to the mid 1990s, to about 2-1/2 percent by the final observation used in this paper, the second quarter of 2000. I find that if I allow for an explicit role for capital accumulation, the recent pace of trend productivity growth is even higher, at around 3 percent. The views expressed in this paper are those of the author and do not necessarily reflect the views of the Board of Governors of the Federal Reserve System or any other member of its staff. I am grateful to Dan Sichel, Bill Wascher, Spencer Krane, Bruce Fallick, Charles Fleischman, and Jeremy Rudd for helpful discussions, and to Ken Kuttner for providing his computer programs. In the latter half of the 1990s, hourly productivity grew considerably faster tha
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