Working Paper: NBER ID: w21556
Authors: Barry Eichengreen; Donghyun Park; Kwanho Shin
Abstract: Productivity growth is slowing around the world. In 2014, according to the Conference Board’s Total Economy Data Base, the growth of total factor productivity (TFP) hovered around zero for the third straight year, down from 1 per cent in 1996-2006 and ½ per cent in 2007-12. In this paper we identify previous episodes of sharp and sustained decelerations in TFP growth using data for a large sample of countries and years. TFP slumps are ubiquitous: we find as many as 77 such episodes, depending on definition, in low-, middle- and high-income countries. Low levels of educational attainment, unusually high investment rates and weak political systems are among the significant country-specific correlates of TFP slumps, while increases in risk (higher TED spreads) and energy-price shocks are among the significant global factors.
Keywords: Total Factor Productivity; Productivity Growth; Economic Slump; Global Factors; Country-Specific Factors
JEL Codes: E0; E1; O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low educational attainment (I24) | tfp slumps (F16) |
| high investment rates (G31) | tfp slumps (F16) |
| weak political systems (P16) | tfp slumps (F16) |
| increases in risk (I12) | tfp slumps (F16) |
| energy price shocks (Q43) | tfp slumps (F16) |