Marattin, Luigi and Salotti, Simone (2010): Productivity and per capita GDP growth: the role of the forgotten factors. Published in: Economic Modelling (2011)
Download (356kB) | Preview
Average hourly productivity has often been used to draw conclusions on long run per capita GDP growth, based on the assumption of full utilization of labour resources. In this paper, we argue that a failure to recognize the potentially significant wedges among the two variables – even in the long run - can be misleading. By applying both time series and panel cointegration techniques on data on 19 OECD countries, we fail to reject the hypothesis of absence of a long run common stochastic trend among the two variables in the period 1980-2005. Furthermore, we apply a simple decomposition of GDP growth into five variables, included some related to the supply-side and demographics, so to verify the single contributions to income growth and variance over our period of interest. We conclude that variables that have been so far absent in the growth literature have indeed a non-negligible role in explaining the dynamics of long run per capita GDP growth. In particular, these “forgotten factors” (that we identify with the employment and the activity rates and a demographic ratio) matter more in better performing economies, where we also highlight that productivity has been less important in determining GDP growth than in relatively bad performers.
|Item Type:||MPRA Paper|
|Original Title:||Productivity and per capita GDP growth: the role of the forgotten factors|
|Keywords:||Growth accounting; productivity; panel cointegration; demographics.|
|Subjects:||O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
E - Macroeconomics and Monetary Economics > E0 - General > E01 - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
|Depositing User:||Dr Simone Salotti|
|Date Deposited:||08. Mar 2011 10:34|
|Last Modified:||14. Feb 2013 01:18|
Baillie, R. T., Selover, D. D. (1987), “Cointegration and Models of Exchange Rate Determination,” International Journal of Forecasting, 3, 43-51.
Baumol, W. J. (1986), “Productivity Growth, Convergence and Welfare: What the Long-Run Data Show,” American Economic Review, 76:5, pp. 1072-85.
Blanchard, O. (2004), “The Economic Future of Europe”, Journal of Economic Perspectives – Volume 18, Number 4, pp. 3-26.
Corbae,D., Ouliaris S., (1988), “Cointegration and Tests of Purchasing Power Parity,” Review of Economics and Statistics, 70, pp. 508-11.
Davidson, J. E. H., Hendry, D. F., Srba, F., Yeo, S. (1978), “Econometric Modelling of the Aggregate Time-series Relationship between Consumer’s Expenditure and Income in the United Kingdom,” Economic Journal, 88, 661-92
Gutierrez, L. (2003), “On the Power of Panel Cointegration Tests: A Monte Carlo Comparison,” Economic Letters, 80(1), pp. 105-111-
Hayashi, F. and Prescott, E. C. (2004), “The 1990s in Japan: a Lost Decade” in The Economics of An Ageing Population, Paolo Onofri, ed. by Edward Elgar, ESRI Studies Series on Ageing.
Hsieh,C. (2002), “What Explains the Industrial Revolution in East Asia? Evidence from Factor Markets,” American Economic Review, XCII, pp. 502-526.
Islam, N. (2003), “What Have We Learnt from the Convergence Debate?”, Journal of Economic Surveys, Vol. 17:3, pp. 309-354.
Jorgenson, D. W. and Stiroh, K. (2000), “Raising the Speed Limit: U.S. Economic Growth in the Information Age,” Brookings Papers on Economic Activity 1, pp. 125-211.
Kremers, J. (1989), “U.S. Federal Indebtedness and the Conduct of Fiscal Policy,” Journal of Monetary Economics, 23, pp. 219-38.
Oliner, S. D. and Sichel, D. E. (2000), “The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?” Journal of Economic Perspectives, 14(4), pp. 3-22.
Piacentini, P. and Sulis, G. (2000), “Crescita Virtuosa e Crescita Neodualistica nell’Ambito Regionale: Tendenze Recenti per le Aree Europee in Ritardo di Sviluppo,” Rivista Economica del Mezzogiorno, 1, Marzo.
Pedroni P. (1999), “Critical Values for Cointegration Tests in Heterogeneous Panels with Multiplie Regressors,” Oxford Bulletin of Economics and Statistics, 61, pp. 653-670.
Solow, R. (1956), “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics, 70, pp. 65-94.
Temple, J. (1999), “The New Growth Evidence,” Journal of Economic Literature, 37:1, pp.112-156.
Whelan, K. (2000), “Computers, Obsolescence, and Productivity,” Federal Reserve Board, Finance and Economics Discussion Series Paper 2000- 6 (February).
Young, A. (1995), “The Tyranny of Numbers: Confronting the Statistical Reality of the East Asia Growth Experience,” Quarterly Journal of Economics, 110, pp. 641-680.