The growth rate of total factor productivity seems to have increased recently, at least in the United States. Higher US … productivity growth may justify higher stock market valuations than in the past and thus herald an emerging New Economy. However …, the size of the estimated growth rate of total factor productivity depends on an assumption about the factor …

We explore the implications of shocks to expected future productivity in a setting with limited enforcement of … response to positive news about future productivity, as well as the other properties of an expectation driven business cycle …