To What Extent does Convergence Explain the Slowdown in Potential Growth of the CEE Countries Following the Global Financial Crisis?

Maciej Stefański

No 2020-058, KAE Working Papers from Warsaw School of Economics, Collegium of Economic Analysis

Abstract: The paper estimates a simple growth model with time-varying cross-country fixed effects on a panel of high-income countries and decomposes changes in potential growth into convergence, movements in the steady state determinants, global TFP growth and labor force growth in order to investigate the sources of potential growth slowdown in CEE following the global financial crisis. Convergence is found to explain about 40% of the slowdown, the other main drivers being falling investment to GDP ratio and the TFP component. Further decomposition of investment and TFP demonstrates that domestic and external factors each account for 25-30% of the slowdown.

Keywords: convergence; potential growth; decomposition; TFP; investment; CEE. (search for similar items in EconPapers)
JEL-codes: O43 O47 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2020-12
New Economics Papers: this item is included in nep-eec, nep-fdg and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:sgh:kaewps:2020058

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