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Sources of Canadian Economic Growth

Samira Hasanzadeh () and Hashmat Khan ()
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Samira Hasanzadeh: Department of Economics, Carleton University

No 16-02, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: We apply modern ideas-oriented growth accounting, based on the semi-endogenous growth theory of Jones (2002), to compare the sources of Canadian and U.S. economic growth between 1981–2014. This framework allows us to distinguish between transition dynamics and steady-state growth as well as quantify their respective contributions. We find that the bulk of the 1.1 percentage points total average Canadian growth rate of output per hour has been due to transitional factors, mainly capital intensity and domestic human capital growth driven by educational attainment. The growth in excess ideas (total ideas growth minus steady state growth) has contributed a small share of 0.06 percentage points. Two features stand out in comparison to the U.S. growth experience over the same period. First, over a full percentage point of the average U.S. growth of 1.64 percent is due to excess ideas growth. Second, the ‘constant growth view’ that reconciles large sources of transitional growth with relatively stable average growth is not supported in Canada. We estimate a relatively low elasticity of output with respect to world research effort as the reason behind the small share of R&D oriented sources of Canadian growth.

Keywords: Modern Growth Accounting; Semi-endogenous Growth Model; Economic Growth (search for similar items in EconPapers)
JEL-codes: O47 O51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fdg, nep-gro, nep-ino and nep-sbm
Date: 2016-03-16, Revised 2017-10-16
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Published: Carleton Economic Papers

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