Different labor productivities for different sectors

General DSGE Modeling
1

Dear all,

For now I have a multi sector model with the same labor productivity for each sector. This is convenient as when I detrend the model, everything variable is detrended by population growth and labor productivity.

What if I want to add different labor productivities for each sectors ? How do I detrend the overall model? It becomes really tricky.

Thank you :slight_smile:

2

That depends on the details of the model. The big question is whether there is still a BGP. If yes, then the aggregate trend will be a composite of the respective sectoral trends and you detrend each variable with its own trend.