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The Lack of European Productivity Growth: Causes and Lessons for the U.S

Author

Listed:
  • Jesus Fernandez-Villaverde

    () (Department of Economics, University of Pennsylvania)

  • Lee Ohanian

    () (Department of Economics, Stanford University)

Abstract

This paper draws lessons from post-World War II Western European economic performance for the current U.S. economy. We document that much of Western Europe grew very quickly from the end of World War II up to the mid-1970s, reflecting policies that incentivized technology adoption and investment in physical and human capital. But since then, European policies have changed considerably, with higher tax rates and increased regulatory barriers that have reduced competition and new business formation. We discuss how the U.S. has shown signs of becoming like Europe over the last decade, and argue why policy reforms are key to restoring U.S. growth.

Suggested Citation

  • Jesus Fernandez-Villaverde & Lee Ohanian, 2018. "The Lack of European Productivity Growth: Causes and Lessons for the U.S," PIER Working Paper Archive 18-024, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 07 Sep 2018.
  • Handle: RePEc:pen:papers:18-024
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    References listed on IDEAS

    as
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    5. Edward C. Prescott, 2004. "Why do Americans work so much more than Europeans?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Jul, pages 2-13.
    6. Germán Gutiérrez & Thomas Philippon, 2018. "How EU Markets Became More Competitive Than US Markets: A Study of Institutional Drift," NBER Working Papers 24700, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Productivity growth; Europe’s economic performance; economic policy;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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