Long run and short run dynamics in italian manufacturing labour productivity

This paper examines structural changes in the Italian manufacturing sector, focusing on labour productivity in recent decades. To this end it distinguishes between trend and cyclical movements in the data using a multivariate unobserved components model. Changes in the relative importance of cyclical and trend components in labour productivity allow discrimination among the impacts of the factors affecting the performance of the Italian manufacturing sector during the 1980s, 1990s and in the more recent period.