Discussion of "The Source of Historical Economic Fluctuations: An Analysis using Long-Run Restrictions" by Neville Francis and Valerie A. Ramey

Abstract

This paper discusses the paper ``The Source of Historical Economic Fluctuations: An Analysis using Long-Run Restrictions´´ by Neville Francis and Valerie A. Ramey. It argues that these authors have made great progress both in the precise measurement of labor input as well as determining the effect of productivity shocks on labor, but a number of questions remain. As for measurement, the issue of schooling needs further work. As for calculating the long-run impact of labor productivity shocks, unreasonable results emerge for the response of the capital stock, if included in the VAR. Using medium-term identification delivers more reasonable results.