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The Canadian Productivity Stagnation, 2002-2014

Listed author(s):
  • Juan Carlos Conesa
  • Pau S. Pujolas

Total Factor Productivity (TFP) growth in Canada between 2002 and 2014 has been only 0.16% per year. Although many developed countries have experienced a productivity slowdown since the beginning of the century, this figure is still substantially smaller than that of the U.S. We perform multiple counterfactual exercises to show that this difference in TFP growth cannot be accounted for by several compositional effects and/or mismeasurements of factors of production. We identify two key sectors (Mining and Manufacturing) that drive all of the TFP growth difference with the U.S. Despite the lack of TFP growth, Canada has experienced sustained income growth due to a prolonged period of appreciation of the terms of trade (while terms of trade in the U.S. have deteriorated), making real income in the two countries grow at similar rates.

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File URL: http://socserv.mcmaster.ca/econ/rsrch/papers/archive/McMasterEconWP2017-04.pdf
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Paper provided by McMaster University in its series Department of Economics Working Papers with number 2017-04.

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Length: 34 pages
Date of creation: Mar 2017
Date of revision: Sep 2017
Handle: RePEc:mcm:deptwp:2017-04
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  1. Díaz, Antonia & Franjo, Luis, 2016. "Capital goods, measured TFP and growth: The case of Spain," European Economic Review, Elsevier, vol. 83(C), pages 19-39.
  2. Juan C. Conesa & Timothy J. Kehoe, 2017. "Productivity, taxes, and hours worked in Spain: 1970–2015," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(3), pages 201-223, August.
  3. Kehoe, Timothy J. & Costa, Daniela & Raveendranathan, Gajen, 2016. "The Stages of Economic Growth Revisited, Part 2: Catching Up to and Joining the Economic Leader," Economic Policy Paper 16-6, Federal Reserve Bank of Minneapolis.
  4. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, Oxford University Press, vol. 129(1), pages 61-103.
  5. Timothy J. Kehoe & Kim J. Ruhl, 2008. "Are Shocks to the Terms of Trade Shocks to Productivity?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 804-819, October.
  6. Simona E. Cociuba & Alexander Ueberfeldt, 2008. "Driving Forces of the Canadian Economy: An Accounting Exercise," Staff Working Papers 08-14, Bank of Canada.
  7. Raphael Bergoeing & Patrick J. Kehoe & Timothy J. Kehoe & Raimundo Soto, 2002. "A Decade Lost and Found: Mexico and Chile in the 1980s," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 166-205, January.
  8. Manuel García-Santana & Enrique Moral-Benito & Josep Pijoan-Mas & Roberto Ramos, 2016. "Growing like Spain: 1995-2007," Economics Working Papers 1517, Department of Economics and Business, Universitat Pompeu Fabra.
  9. Koh, Dongya; Santaeulàlia-Llopis, Raül; Zheng, Yu, 2015. "Labor share decline and intellectual property products capital," Economics Working Papers ECO2015/05, European University Institute.
  10. Raphael Bergoeing & Patrick J. Kehoe & Timothy J. Kehoe & Raimundo Soto, 2002. "A Decade Lost and Found: Mexico and Chile in the 1980s," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 166-205, January.
  11. Mirta N.S. Bugarin & Roberto Ellery Jr & Victor Gomes & Arilton Teixeira, 2002. "The Brazilian Depression in the 1980s and 1990s," Computing in Economics and Finance 2002 338, Society for Computational Economics.
  12. Juan Carlos Conesa & Timothy J. Kehoe & Kim J. Ruhl, 2007. "Modeling great depressions: the depression in Finland in the 1990s," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Nov, pages 16-44.
  13. Kehoe, Timothy J. & Costa, Daniela & Raveendranathan, Gajen, 2016. "The Stages of Economic Growth Revisited: Part 1: A General Framework and Taking Off into Growth," Economic Policy Paper 16-5, Federal Reserve Bank of Minneapolis.
  14. Pedro Amaral & James C. MacGee, 2002. "The Great Depression in Canada and the United States: A Neoclassical Perspective," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 45-72, January.
  15. Barry Bosworth & Susan M. Collins, 2008. "Accounting for Growth: Comparing China and India," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 45-66, Winter.
  16. Timothy J. Kehoe & Kim J. Ruhl, 2008. "Are Shocks to the Terms of Trade Shocks to Productivity?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 804-819, October.
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