The pre-Great Recession slowdown in productivity

Gilbert Cette, John Fernald () and Benoit Mojon

European Economic Review, 2016, vol. 88, issue C, 3-20

Abstract: In the years since the Great Recession, many observers have highlighted the slow pace of productivity growth around the world. For the United States and Europe, we highlight that this slow pace began prior to the Great Recession. The timing thus suggests that it is important to consider factors other than just the deep crisis itself or policy changes since the crisis. For the United States, at the frontier of knowledge, there was a burst of innovation and reallocation related to the production and use of information technology in the second half of the 1990s and the early 2000s. That burst ran its course prior to the Great Recession. Continental European economies were falling back relative to that frontier at varying rates since the mid-1990s. We provide VAR and panel-data evidence that changes in real interest rates have influenced productivity dynamics in this period. In particular, the sharp decline in real interest rates that took place in Italy and Spain seem to have triggered unfavorable resource reallocations that were large enough to reduce the level of total factor productivity, consistent with recent theories and firm-level evidence.

Keywords: Productivity growth; Great Recession; Misallocation; Convergence (search for similar items in EconPapers)
JEL-codes: D24 E23 E44 F45 O47 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (217)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292116300654
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Pre-Great Recession Slowdown in Productivity (2016)
Working Paper: The pre-Great Recession slowdown in productivity (2016)
Working Paper: The pre-Great Recession slowdown in productivity (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:88:y:2016:i:c:p:3-20

DOI: 10.1016/j.euroecorev.2016.03.012

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().