What happened to the world's potential growth after the 2008–2009 global financial crisis?
Jesus Felipe () and
Journal of the Japanese and International Economies, 2020, vol. 56, issue C
This paper provides estimates of potential growth for 52 economies in 2000–2018. We follow Borio et al.’s (2014, 2017) methodology, which takes into account the relationship between financial factors and the output gap. We find that the world's potential growth declined from an average of 3.0% in 2000–2007 to 2.6% in 2010–2018. Potential growth peaked before the crisis at 3.4% in 2006. The trough was in 2009 at 2.3%. Potential growth started recovering in 2010 and reached 2.9% in 2018. Decomposing the 0.4 percentage points decline between 2000–2007 and 2010–2018 by economy, we find that high-income Europe contributed 0.34 percentage points. The decline in potential growth in the United States contributed 0.24 percentage points, while the decline in Japan contributed just 0.07 percentage points. China's potential growth and that of Asia and the Pacific also fell, but their contributions to the change in the world's potential growth were positive, 0.33 percentage points and 0.11 percentage points, respectively. The other economies contributed 0.19 percentage points to the decline. Decomposing the sources of the decline into the contributions of labor force growth and labor productivity growth, the former declined by 0.55 percentage points, while labor productivity growth increased by 0.15 percentage points.
Keywords: Global financial crisis; Harrod's natural growth rate; Kalman filter; Okun's law; Output gap; Potential growth (search for similar items in EconPapers)
JEL-codes: E22 G00 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:56:y:2020:i:c:s0889158320300095
Access Statistics for this article
Journal of the Japanese and International Economies is currently edited by Takeo Hoshi
More articles in Journal of the Japanese and International Economies from Elsevier
Bibliographic data for series maintained by Catherine Liu ().