The Productivity-Inflation Nexus in Canada 1963-1979
Bibliographic record
Abstract
During recent years the Canadian economy has been simultaneously subjected to increasing rates of inflation and declining growth in labour productivity. Virtually all analysis of the macroeconomic relationship between the two phenomena has been based on the premise that there is a unidirectional flow of causation from productivity growth (assumed to be exogenous) to inflation. In this paper we have attempted to identify the macroeconomic relationship between labour productivity growth and inflation. Specifically, we utilized both a reduced-form, bivariate Granger technique and structural models to test the hypothesis that the result of increased productivity growth is a one-for-one reduction in inflation against the alternative hypothesis that, because of a feedback relationship, inflation may itself have had a negative effect on productivity growth in Canada over the 1963-79 period. In the bivariate case we observed the existence of bidirectional causality and this allowed us to reject the hypothesis that the payoff to increased productivity growth is a unit-proportional reduction in inflation. Rather, the implied multiplier is 2.24. A variety of structural models also displayed a feedback relationship. Anticipated inflation was shown to figure more importantly than unanticipated inflation in its negative effect on productivity growth, but our measures of uncertainty about inflation appeared to have had no incremental influence. Depending on how one proxies inflation expectations in the model, a 'permanent' one percentage point increase in inflation leads to a reduction in productivity growth of .08 to .34 percentage points. This is sufficient to explain a substantial portion of the recent slowdown in productivity growth. The long-run inflation multiplier associated with an increase in productivity growth lies in the range of -.75 to -1.33.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.003 | 0.001 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.000 | 0.001 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.000 | 0.000 |
| Open science | 0.000 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".