Denmark: Selected Issues

International Monetary Fund

No 2024/293, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper discusses the macroeconomic impact of the pharmaceutical sector. The analysis focuses on Novo Nordisk, the leading pharmaceutical company in Denmark, and its productivity impact on the rest of the economy. Empirical evidence suggests only weak correlations between productivity shocks at Novo Nordisk and overall economic growth, as well as between Novo Nordisk’s productivity and that of other firms. The findings suggest there is limited risk that Denmark’s booming pharmaceutical company would become its “Nokia.” Although the pharmaceutical sector will be a key driver of growth, most of its production occurs overseas under Danish ownership. As a result, its linkages with the rest of the domestic economy, in terms of employment and supply chains, are somewhat limited. The empirical results also indicate limited spillover effects through productivity channels. However, the empirical results may underestimate the influence of Novo Nordisk due to limited data.

Keywords: mitigating factor; productivity shock; E. policy option; Policy consideration; shocks to Novo Nordisk; energy firm; covered bond bond market; Nonbank financial institutions; Labor productivity; Covered bonds; Systemic risk assessment; Productivity; Global (search for similar items in EconPapers)
Pages: 32
Date: 2024-09-13
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