Conditional Convergence and Future TFP Growth in Israel
Shay Tsur () and
Eyal Argov ()
Additional contact information
Eyal Argov: Bank of Israel
No 2019.05, Bank of Israel Working Papers from Bank of Israel
This study is part of a broad project of constructing a long-run growth model for Israel, and to evaluate how different exogenous developments, or policy steps, are expected to affect the long run growth rate. The current study describes the Total Factor Productivity (TFP) block of the project. We first estimate productivity determinants in regressions that are based on a cross section of countries with fundamental variables such as geography and culture, together with policy affected variables such as physical and human infrastructures, and institutions. We test the robustness of the policy estimates by running panel regressions with policy variables for which historical data are available. Using the estimates from the cross section regressions we calculate the gap of each country's productivity from its own predicted value, and forecast Israel's TFP growth by using this calculated gap as the potential to converge and therefore to grow faster than the average world growth rate. In this respect, this work is novel in integrating the deep roots of growth literature into a conditional convergence framework. We find that Israel's actual productivity level is slightly below the predicted one, suggesting that it has only a small potential to grow faster than the average global growth. The baseline TFP growth forecast for the years 2015--60 is 0.47, very similar to the historical growth rate of Israel's TFP over the last 15 years.
New Economics Papers: this item is included in nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
ftp://repec-boi.northeurope.cloudapp.azure.com/RePEc/boi/wpaper/WP_2019.05.pdf First version, 2019 (application/pdf)
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:boi:wpaper:2019.05
Access Statistics for this paper
More papers in Bank of Israel Working Papers from Bank of Israel Contact information at EDIRC.
Bibliographic data for series maintained by Dafna Koby ().