small open economy undergoing real convergence. We consider the effects of productivity catch-up and misperceptions about … future productivity developments. Our results indicate that even if real convergence takes the form of a gradual process, the … productivity shifts can generate sizable boom-bust cycles and so be relevant in accounting for cyclical deviations from a …

This paper analyses the endogeneity of euro area total factor productivity and its role in business cycle amplification … by estimating a medium-scale DSGE model with endogenous productivity mechanism on euro area data. In this framework …, total factor productivity evolves endogenously as a consequence of costly investment in R&D and adoption of new technologies …

news about future productivity. By contrast, the baseline RBC model produces neither persistent growth rates nor business …