Abstract
This paper identifies two structural trends responsible for growth in per capita industrial production in the US, the UK and Japan. First, using Johansen's multivariate cointegration approach, the number of common trends in the three industrial production series and the real price of oil is estimated to be two. Next, long-run restrictions are used to separate structural errors with temporary effects from those with permanent effects. Finally, it is assumed that the oil price is affected by only a single structural trend. This identifies a trend, which has a structural interpretation as a natural resource constraint, and another trend with positive drift, interpreted as productivity.
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