The bottom panel of figure 1 again shows the HP-smoothed trend for the NFPB sector, this time juxtaposed against the similarly calculated trend for the entire economy.
17 percent a year, while NFPB productivity growth increased from 1.
Table 4 displays results from the preferred specification (equation 9) of the inflation equation applied in the first and fourth columns to two different inflation measures, the PCE deflator and the NFPB deflator, respectively.
The top panel shows five lines of results for the NFPB deflator: the actual change, the simulated change assuming the actual behavior of the productivity growth trend acceleration variable, the counterfactual simulation that suppresses the same productivity variable to zero, the simulation error (the first line minus the second), and the counterfactual effect of the change in trend productivity growth (the second line minus the third).
As in the simulation results presented earlier, the simulation errors for the NFPB deflator are very small, with no drift at all in the final four quarters of the simulation period.
73 * NFPB sector trend labor share, (c) 1-8 lags Productivity acceleration, (d) 1st lag -0.
The denominator is aggregate hours of work, that is, NFPB employment times NFPB hours per employee.
In trying to understand the recent period, it is helpful to combine the mix and employment ratio effects; as in equation 2, these two effects when multiplied together become the ratio of real GDP per household employee to the ratio of NFPB output to NFPB payroll employees.
Translating this directly into an overstatement in the productivity data would reduce output per hour in the NFPB sector in 2003:2 by 0.
This requires going beyond a discussion of trend productivity growth performance to examine the determinants of future growth in the working-age population, in hours per employee, and in the mix and payroll-to-household employment ratio terms that are needed to translate productivity growth in the NFPB sector into an equivalent growth rate for real GDP in the economy as a whole.
5 percent a year, as my central projection of future productivity growth in the NFPB sector.
Discussion of hours per employee can be confusing, because there are separate measures of hours per employee in the NFPB sector and of hours per household employee in the total economy.