Macroeconomic Perspectives on Productivity

Jagjit S. Chadha and Issam Samiri

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We investigate UK labour productivity over the long run, comparing it to other advanced economies and focus on the sharp slowdown since the global financial crisis. Using a growth accounting framework, we find a dominant role for total factor productivity (TFP), but it turns out that capital shallowing is also important. Two macroeconomic trends deepen the puzzle of this slowdown. There has been a decline in real interest rates over the past 30 years and an increase in labour supply since 2008, both of which ought to have increased investment. And yet, the ratio of (nominal) private and public investment to GDP has fallen over time. We go on to examine the UK's productivity performance through the lens of standard neoclassical models and reconsider the secular stagnation debate in the UK context. Finally, we survey several explanations from recent economic literature for the poor performance of investment.

Keywords: Productivity; Macroeconomics; Real Interest Rates; Investment (search for similar items in EconPapers)
JEL-codes: E22 E24 E32 E44 E51 E62 O16 O42 O47 (search for similar items in EconPapers)
Date: 2024-06-27
New Economics Papers: this item is included in nep-eff, nep-fdg, nep-his and nep-mac
Note: jsc38
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Working Paper: Macroeconomic Perspectives on Productivity (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2437

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