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Technical Progress, Factor Productivity and Macroeconomic Performance in the Medium Term

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  • Claude Giorno
  • Pete Richardson
  • Wim Suyker

Abstract

This paper examines the possible short- and medium-term macroeconomic consequences of changes in trend factor productivity growth for the major OECD economies. The analysis includes a range of different scenarios based on the recently re-estimated OECD INTERLINK model, in particular its supply-side properties, which illustrate a range of uncertainties and the sensitivity of the adjustment mechanisms to macroeconomic and structural factors. Overall the results suggest that a rise in trend factor productivity will lead to higher levels of production and real income, but employment adjustment will depend on the extent to which the long-run equilibrium of an economy is affected. Though unemployment could rise temporarily, there are important mechanisms present which, if functioning correctly, should prevent any permanent increase in unemployment. The degree of market flexibility is, however, seen as being crucial to the adjustment process, with higher rigidities tending to lengthen the ... Cet article examine les possibles conséquences macro-économiques à court et moyen termes de changements du rythme de croissance de la productivité tendancielle des facteurs de production dans les principales économies de l’OCDE. L’analyse, qui inclue un ensemble de scénarios réalisés à l’aide du modèle INTERLINK de l’OCDE qui a récemment été réestimé, illustre le degré d’incertitude et de sensibilité des mécanismes d’ajustement, qui entrent alors en jeu, à un certain nombre de facteursmacro-économiques et structurels. Dans l’ensemble, les résultats suggèrent qu’une hausse de la productivité tendancielle des facteurs permet d’atteindre des niveaux de production et de revenus réels plus élevés, mais que l’ajustement de l’emploi dépend de la mesure dans laquelle l’équilibre de long terme de l’économie est affecté. Bien que le chômage puisse croître temporairement, d’importants mécanismes existent, qui, s’ils fonctionnent correctement, doivent empêcher toute hausse permanente du nombre ...

Suggested Citation

  • Claude Giorno & Pete Richardson & Wim Suyker, 1995. "Technical Progress, Factor Productivity and Macroeconomic Performance in the Medium Term," OECD Economics Department Working Papers 157, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:157-en
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    File URL: http://dx.doi.org/10.1787/648682381876
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    Cited by:

    1. Jaromír Hurník & David Navrátil, 2005. "Potential Output in the Czech Republic: A Production Function Approach," Prague Economic Papers, University of Economics, Prague, vol. 2005(3), pages 253-266.
    2. Kieran Mc Morrow & Werner Roeger, 2001. "Potential Output: Measurement Methods, "New" Economy Influences and Scenarios for 2001-2010 - A comparison of the EU-15 and the US," European Economy - Economic Papers 2008 - 2015 150, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. Cécile Denis & Kieran Mc Morrow & Werner Röger, 2002. "Production function approach to calculating potential growth and output gaps - estimates for the EU Member States and the US," European Economy - Economic Papers 2008 - 2015 176, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    4. Elias Kourliouros & George Korres & Emmanuel Marmaras & George Tsobanoglou, 2006. "Economic Geography and Regional Growth: An Empirical Evidence From Greece," ERSA conference papers ersa06p30, European Regional Science Association.
    5. Sell, Friedrich L., 2003. "Die Stabilitätsprogramme der EU: Anspruch und Wirklichkeit in den ersten vier Jahren der Europäischen Währungsunion," Working Papers in Economics 2003,2, Bundeswehr University Munich, Economic Research Group.
    6. KORRES, George M. & CHIONIS, Dionysios P. & TSAMADIAS, Constantine, 2004. "Labour Productivity in the European Union and Comparison with the USA, 1979-2001," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 1(4), pages 85-112.

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