Assessing Potential Output Growth in the Euro Area: A Growth Accounting Perspective
44 Pages Posted: 3 Aug 2005
Date Written: January 2005
Abstract
For monetary policy purposes it is useful to apply a concept of potential output growth that looks through the fluctuations inherent in most model based estimates. Growth accounting can be a useful tool in this respect, given its focus on average developments in real GDP growth and supply side factors over medium to longer-term horizons. This paper describes the assumptions and measurement issues underlying the growth accounting framework and applies it to euro area data for the period 1980 to 2003. It shows that growth in measured total factor productivity has been the single most important contributor to real GDP growth over this period. However, the contribution to growth from this factor declined between the 1980s and the 1990s, while that from labour increased. Looking forward, the projected demographic developments imply a reduction in average real GDP growth in the coming decades unless compensation is achieved from other supply-side factors.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Growth in Euro Area Labour Quality
By Guido Schwerdt and Jarkko Turunen
-
Growth in Euro Area Labour Quality
By Guido Schwerdt and Jarkko Turunen
-
Euro Area Production Function and Potential Output: A Supply Side System Approach
By Alpo Willman
-
Capital Quality Improvement and the Sources of Growth in the Euro Area
-
Trends and Patterns in Working Time Across Euro Area Countries 1970-2004: Causes and Consequences
-
Omitted Variables in the Measure of a Labour Quality Index: The Case of Spain
By Aitor Lacuesta, Sergio Puente, ...
-
The Ifo Industry Growth Accounting Database
By Oliver Roehn, Theo S. Eicher, ...