Is factor productivity due to revert to its long-run mean?

Peter Ireland and Scott Schuh write:

A two-sector real business cycle model, estimated with postwar U.S. data, identifies shocks to the levels and growth rates of total factor productivity in distinct consumption- and investment-goods-producing technologies.  This model attributes most of the productivity slowdown of the 1970s to the consumption-goods sector; it suggests that a slowdown in the investment-goods sector occurred later and was much less persistent.  Against this broader backdrop, the model interprets the more recent episode of robust investment and investment-specific technological change during the 1990s largely as a catch-up in levels that is unlikely to persist or be repeated anytime soon.

Here is the paper, have you noticed that NBER working papers seem to have been freed from the gate? 

On questions like this I prefer to be "judgment-driven" rather than model-driven, and judgment says "who knows?"  Plus two-sector calibrated RBC models are not in every regard a smashing success.  Yet why should the rate of productivity growth remain permanently higher?  At the very least, this is an admonition to be sober and modest in our economic judgments.  The rate of productivity growth is a fundamental determinant of long-run living standards.  Yet when it comes to understanding or predicting this variable, economics has been sadly deficient, especially at the turning points.  Commentators of various political persuasions rail against taxes, tax cuts, spending, spending cuts, poorly thought deregulation, whatever, but might they be chomping at gnats?


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