The pre-Great Recession slowdown in productivity
Gilbert Cette (),
John Fernald () and
Benoit Mojon ()
No 2016-8, Working Paper Series from Federal Reserve Bank of San Francisco
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.
JEL-codes: D24 E23 E44 F45 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-eff, nep-ino, nep-mac, nep-opm and nep-sbm
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Journal Article: 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)
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