This is a simple way to capture the evidence I reviewed in the first part of my talk. In practice, there is a continuum of possibilities from purely transitory, to transitory but persistent, until truly permanent changes in the rate of productivity growth.
The key empirical feature, however, is that transitory shocks tend to explain most of short-term dynamics of labour productivity growth, which is very volatile on a quarterly basis. Persistent, or perhaps permanent shocks, occur more rarely and appear to be smaller. Second, perceptions as to the persistent nature of productivity shocks must be allowed to change over time.