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

  • Claude Giorno
  • Pete Richardson
  • Wim Suyker

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 ...

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File URL: http://dx.doi.org/10.1787/648682381876
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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 157.

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Date of creation: 1995
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Handle: RePEc:oec:ecoaaa:157-en
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