Supply-Side Performance and Structure in the Czech Republic (1995-2005)
AbstractIn this paper, we apply the aggregate production function to approximate the path of potential output. We use a time-varying NAIRU to derive the amount of potential labour and a newly developed measure of capital services to account for the productive impact of capital. In addition, trend total factor productivity is estimated. Production functions for the key sectors (Agriculture, Industry, etc.) are also calculated, exploring the growth accounting approach and decomposition of total factor productivity growth. During 1995--2005, the growth in potential output was constrained by a gradual increase in the NAIRU, a temporary drop in investment activity and, most importantly, by only a modest rise in total factor productivity. In this period, the Czech economy also suffered from a structural burden, i.e. all growth in total factor productivity was exclusively due to better utilisation of resources, given their initial allocation, with an even negative contribution of resource reallocation. Just from 2001 onwards, we observe substantial improvements in supply-side performance, except for the functioning of the labour market.
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Bibliographic InfoPaper provided by Czech National Bank, Research Department in its series Working Papers with number 2006/4.
Date of creation: Oct 2006
Date of revision:
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. Capital services; factor allocation and utilisation; growth accounting; NAIRU; potential output; production function; structural changes; total factor productivity.;
Find related papers by JEL classification:
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-23 (All new papers)
- NEP-EFF-2007-01-23 (Efficiency & Productivity)
- NEP-MAC-2007-01-23 (Macroeconomics)
- NEP-TRA-2007-01-23 (Transition Economics)
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