A model of labour productivity that distinguishes between permanent and transient shocks on productivity is proposed. We show that this model is a type of unobserved components model -- a random walk with drift plus noise model. The advantage of this approach is that it provides a coherent...

In this article, we set out a model of labour productivity which distinguishes between shocks which change productivity permanently and shocks which have transient affects on productivity. We show that this model is a type of unobserved components model -- a random walk with drift plus noise...