Are Advanced Countries Facing Stagnation?

Paper Session

Saturday, Jan. 7, 2017 10:15 AM – 12:15 PM

Hyatt Regency Chicago, Grand Ballroom CD North
Hosted By: Society of Policy Modeling & American Economic Association
  • Chair: Dominick Salvatore, Fordham University

Can We Really Predict Productivity Growth?

Olivier Blanchard
,
Peterson Institute for International Economics

Abstract

Productivity growth has declined. Is it likely to be permanent? Some economists are taking strong positions. I have however been struck by our inability to predict productivity growth, and I want to go back and look at the time series properties of growth, by sector, and perhaps by type (innovation, versus implementation). See how much predictive power we get, and draw conclusions for the question above.

The Global Productivity Slump: Common and Country-Specific Factors

Barry Eichengreen
,
University of California-Berkeley

Abstract

Productivity growth is slowing around the world. 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 and unusually high investment rates are among the significant country-specific correlates of TFP slumps, while energy-price shocks are among the significant global factors.

Why is Growth Better in the United States than Other Industrial Countries?

Martin Feldstein
,
Harvard University

Abstract

As of now, the US economy is doing much better than other major industrial countries. The US is essentially at full employment, has a core CPI inflation rate of 2.2 percent, and has expected growth of more than two percent in 2016. Europe and Japan have lower growth and higher unemployent even though they have an easier monetary policy and a bigger fiscal deficit. The US does better because of an entrepreneurial culture, a financial system that supports that culture, universities that contribute to that entrepreneurship, and labor markets that match workers and jobs without the barriers created by large labor unions, state owned enterprises, and very high tax rates.

The Outlook for Advanced Economies

Dale Jorgenson
,
Harvard University

Abstract

In the twenty-first century the balance of the world economy has shifted from the G7 industrialized economies, led by Europe, Japan, and the United States, to the emerging economies of Asia, especially China and India. While world economic growth will continue at a rapid pace, all members of the G7 will grow more slowly that the world economy, while China and India will continue to grow more rapidly. Growth in the advanced economies will fully recover from the financial and economic crisis of the past decade, but a longer-term trend toward slower economic growth will be re-established.

Long-Term Trend Stagnation or Debt Supercycle?

Kenneth Rogoff
,
Harvard University

Abstract

During periods of extended slow growth, particularly after financial crises, there is often a tendency to extrapolate poor productivity and growth performance far into the future. Karl Marx wrote as the first industrial revolution was fading, but just before the second industrial revolution began; Alvin Hansen wrote at the end of the Great Depression. This paper show that the sustained slowdown in advanced-country growth since 2007 is fully consistent with a debt supercycle that began in the US, then moved to the Eurozone debt crisis, and has now moved to China and Asia, and will eventually come to an end.
Discussant(s)
Dominick Salvatore
,
Fordham University
JEL Classifications
  • E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
  • F4 - Macroeconomic Aspects of International Trade and Finance