Template-type: ReDIF-Article 1.0 Author-Name: Andrew Sharpe Author-Email: andrew.sharpe@csls.ca Title: Editor’s Overview Abstract: This eighth issue of the International Productivity Monitor produced by the Centre for the Study of Living Standards contains eight articles. Topics covered are: a progress report on endogenous growth theory; recent productivity developments in Canada and the United States; monetary policy in the new economy; the effect of information and communications technologies (ICTs) on UK productivity growth; the choice of the business sector versus the total economy for assessing aggregate productivity trends; the measurement of productivity growth in services industries; and a review article of a recent book, Why Economies Grow. Classification-JEL: E62, E52, O47, O51, O38, L80 Keywords: Canada, United States, Endogenous Growth, Productivity, Labour Productivity, Productivity Growth, Productivity Growth Acceleration, Post-2000, Post-1995, Information Technology, ICT, United Kingdom, Business Sector, Total Economy, Service Sector, Services, Service Industries Journal: International Productivity Monitor Pages: 1-2 Volume: 8 Year: 2004 Month: Spring File-URL: http://www.csls.ca/ipm/8/overview-e.pdf File-Format: Application/pdf File-Size: 118 KB File-URL: http://www.csls.ca/ipm/8/overview-f.pdf File-Function: version en français File-Format: Application/pdf File-Size: 118 KB Handle: RePEc:sls:ipmsls:v:8:y:2004:0 Template-type: ReDIF-Article 1.0 Author-Name: Peter Howitt Author-Email: peter_howitt@brown.edu Title: Endogenous Growth, Productivity and Economic Policy: A Progress Report Abstract: In recent years, our understanding of the sources of growth has been strongly influenced by endogenous growth theory. In the first article, Peter Howitt of Brown University, one of the leading researchers in the field, provides a progress report on the current state of the endogenous growth literature. Among the many policy insights discussed by Howitt are that policies fostering technology transfer provide countries with the ability to converge to the productivity growth rate of the technological leaders; that educational attainment, the health of the population, public infrastructure and tax policy are all important drivers of productivity growth; and that competition policy can actually spur innovation and hence growth through a variety of channels, including a desire on the part of firms to escape competition by remaining at the technological frontier. Classification-JEL: E62, O47, O38, D24 Keywords: Productivity, Macroeconomic Policy, Investment, Competition, Research and Development, Endogenous Growth, Growth, Endogenous, Scale Effect, Patents, General Purpose Technologies Journal: International Productivity Monitor Pages: 3-15 Volume: 8 Year: 2004 Month: Spring File-URL: http://www.csls.ca/ipm/8/howitt-e.pdf File-Format: Application/pdf File-Size: 211 KB File-URL: http://www.csls.ca/ipm/8/howitt-f.pdf File-Function: version en français File-Format: Application/pdf File-Size: 213 KB Handle: RePEc:sls:ipmsls:v:8:y:2004:1 Template-type: ReDIF-Article 1.0 Author-Name: Andrew Sharpe Author-Email: andrew.sharpe@csls.ca Title: Recent Productivity Developments in Canada and the United States: Productivity Growth Deceleration versus Acceleration Abstract: Since 2000, productivity growth in Canada and the United States have followed markedly different paths. In the second article, Andrew Sharpe of the Centre for the Study of Living Standards finds that the remarkable productivity growth experienced in the United States in the past two years is most likely evidence of a post- 2000 productivity growth acceleration, similar to the post-1995 acceleration. The source of this second acceleration appears to be the rapid pace of technological change, fostered by pressures on firms to cut costs, organizational changes that allow the productivity-enhancing potential of ICTs to be realized, and the cheapening of the price of capital goods relative to labour. In contrast, productivity growth in Canada decelerated after 2000. The source of the difference with the U.S. performance has been the labour market, with employment declining in the United States but showing strong increases in Canada. Sharpe states that Canada’s poor productivity growth since 2000 has largely been a cyclical phenomenon, and that Canadian productivity growth should rebound as the economy recovers. Classification-JEL: O51, O57, O47, D24 Keywords: Labour Productivity, Productivity, Productivity Growth, Investment, Information Technology, Information and Communication Technologies, Canada, United States, Acceleration, Productivity Growth Acceleration, Post-2000, Post-1995 Journal: International Productivity Monitor Pages: 16-26 Volume: 8 Year: 2004 Month: Spring File-URL: http://www.csls.ca/ipm/8/sharpe-e.pdf File-Format: Application/pdf File-Size: 205 KB File-URL: http://www.csls.ca/ipm/8/sharpe-f.pdf File-Function: version en français File-Format: Application/pdf File-Size: 216 KB Handle: RePEc:sls:ipmsls:v:8:y:2004:2 Template-type: ReDIF-Article 1.0 Author-Name: Gilbert Cette Author-Email: gilbert.cette@banque-france.fr Author-Name: Christian Pfister Author-Email: christian.pfister@banque-france.fr Title: Challenges of the “New Economy” for Monetary Policy Abstract: While much attention has focused on the factors that brought about the so-called new economy, much less attention has been paid to optimal policy responses following the establishment of the new economy. In the third article, Gilbert Cette and Christian Pfister from the Bank of France provide such an analysis for the case of monetary policy. They state that the term ‘new economy’ embodies both an acceleration in productivity growth and a disinflationary effect. Central banks can respond to the new economy in several ways in attempting to meet their short-term growth objectives and longer-term inflation objectives. In the long term, monetary policy is most effective in achieving its objectives when the inflation target is changed in response to the new economy and when the monetary authority attempts to stabilize both inflation and output. In the short term, however, when uncertainties regarding the existence of the new economy are present, caution is called for in changing the assessment of the potential growth rate and the inflation target. Classification-JEL: E37, E31, E52, E58, O30, D24 Keywords: Monetary Policy, New Economy, Inflation, Inflation Targeting, Central Bank, Monetary Authority, Taylor Rule, Total Factor Productivity Journal: International Productivity Monitor Pages: 27-36 Volume: 8 Year: 2004 Month: Spring File-URL: http://www.csls.ca/ipm/8/cette_pfister-e.pdf File-Format: Application/pdf File-Size: 199 KB File-URL: http://www.csls.ca/ipm/8/cette_pfister-f.pdf File-Function: version en français File-Format: Application/pdf File-Size: 204 KB Handle: RePEc:sls:ipmsls:v:8:y:2004:3 Template-type: ReDIF-Article 1.0 Author-Name: Giovanni Notaro Author-Email: gnotaro@londonecon.co.uk Title: ICT, Output and Productivity Growth in the United Kingdom: A Sectoral Analysis Abstract: Much has been written, including in previous issues of the Monitor, on the importance of Information and Communication Technologies (ICTs) in productivity growth, but this research has focused primarily on North America. In the fourth article, Giovanni Notaro of London Economics investigates this issue for the United Kingdom using a bottom-up analysis, in which aggregate trends are derived from trends in the 11 sectors of the economy. Using a standard growth accounting framework, Notaro finds ICTs made a substantial contribution to output growth in the largest sectors of the UK economy in the 1990s, and that ICT capital is a primary driver of labour productivity growth in all UK sectors except mining and quarrying. He concludes that the weaker productivity performance of the United Kingdom relative to the United States can be attributed mainly to slower accumulation of capital, both ICTs and non-ICTs. Classification-JEL: O52, O47, O30, D24, L16 Keywords: Productivity Growth, Productivity, Information and Communication Technologies, Information Technology, Growth Accounting, United Kingdom, Sector, Industry, Europe Pages: 37-46 Volume: 8 Year: 2004 Month: Spring File-URL: http://www.csls.ca/ipm/8/notaro-e.pdf File-Format: Application/pdf File-Size: 206 KB File-URL: http://www.csls.ca/ipm/8/notaro-f.pdf File-Function: version en français File-Format: Application/pdf File-Size: 214 KB Handle: RePEc:sls:ipmsls:v:8:y:2004:4 Template-type: ReDIF-Article 1.0 Author-Name: Jeremy Smith Author-Email: jeremy@csls.ca Title: Assessing Aggregate Labour Productivity Trends in Canada and the United States: Total Economy versus Business Sector Perspectives Abstract: Jeremy Smith of the Centre for the Study of Living Standards looks at the comparability of productivity growth measures in Canada and the United States, and finds that comparisons of aggregate productivity performance are sensitive to whether trends are assessed at the business sector or total economy level. This sensitivity is a result of substantially higher measured non-business sector productivity growth in Canada relative to the United States, which is partially explained by different measurement techniques in the two countries. There is no definitive answer as to which level is preferable for international productivity growth comparisons. Classification-JEL: E01, O51, O47, C82, J24 Keywords: Labour Productivity, Measurement, Business Sector, Total Economy, Non-business Sector, Output Measurement, Non-marketed Output, Education Output, Imputed Rents Journal: International Productivity Monitor Pages: 47-58 Volume: 8 Year: 2004 Month: Spring File-URL: http://www.csls.ca/ipm/8/smith-e.pdf File-Format: Application/pdf File-Size: 225 KB File-URL: http://www.csls.ca/ipm/8/smith-f.pdf File-Function: version en français, pp:47-59 File-Format: Application/pdf File-Size: 243 KB Handle: RePEc:sls:ipmsls:v:8:y:2004:5 Template-type: ReDIF-Article 1.0 Author-Name: Dirk Pilat Author-Email: dirk.pilat@oecd.org Author-Name: Paul Schreyer Author-Email: paul.schreyer@oecd.org Title: The OECD Productivity Database: An Overview Abstract: Dirk Pilat and Paul Schreyer of the OECD discuss the new OECD Productivity Database. The database covers 26 OECD countries for labour productivity estimates, as well as 14 countries for multifactor productivity estimates. While the database represents the most comparable productivity estimates that are currently available for cross-OECD comparisons, the authors also describe current work planned by the OECD that will improve comparability further. Classification-JEL: E01, O47, C82, J24, D24, O57 Keywords: Productivity, Labour Productivity, Multifactor Productivity, OECD, Measurement, Comparability, Hours, Hours Worked, Output, Capital Services Journal: International Productivity Monitor Pages: 59-65 Volume: 8 Year: 2004 Month: Spring File-URL: http://www.csls.ca/ipm/8/pilat_schreyer-e.pdf File-Format: Application/pdf File-Size: 197 KB File-URL: http://www.csls.ca/ipm/8/pilat_schreyer-f.pdf File-Function: version en français, pp:60-67 File-Format: Application/pdf File-Size: 209 KB Handle: RePEc:sls:ipmsls:v:8:y:2004:6 Template-type: ReDIF-Article 1.0 Author-Name: Anita Wölfl Author-Email: anita.woelfl@oecd.org Title: Productivity Growth in Services Industries: Is There a Role for Measurement? Abstract: Productivity growth has tended to be slower in service industries than in goods industries. Anita Wölfl of the OECD finds that measurement error may be responsible for slower productivity growth in the service sector. She notes that some service industries in certain OECD countries have experienced negative productivity growth over long periods, despite intensive use of Information and COmmunication Technologies (ICTs), exposure to international competition, and the existence of economies of scale. Wölfl discusses the several possible sources of measurement error that may lead to this unexpected result and quantifies the impact of correcting for measurement errors on aggregate productivity growth. Classification-JEL: L80, C82, E01, O47 Keywords: Productivity Growth, Service Industries, Services, Service Sector, Baumol’s Cost Disease, Measurement Error, Output Measurement Pages: 66-80 Volume: 8 Year: 2004 Month: Spring File-URL: http://www.csls.ca/ipm/8/wolfl-e.pdf File-Format: Application/pdf File-Size: 326 KB File-URL: http://www.csls.ca/ipm/8/wolfl-f.pdf File-Function: version en français, pp:68-82 File-Format: Application/pdf File-Size: 325 KB Handle: RePEc:sls:ipmsls:v:8:y:2004:7 Template-type: ReDIF-Article 1.0 Author-Name: Andrew Sharpe Author-Email: andrew.sharpe@csls.ca Title: Understanding Economic Growth: Review Article of Why Economies Grow Abstract: The question of why economies grow has been at the heart of economic inquiry since Adam Smith. The final article is a review of the recent book Why Economies Grow: The Forces That Shape Prosperity and How to Get Them Working Again by Jeff Madrick. He argues that the growth of markets through trade, colonization, and domestic expansion was the predominate factor in Western economic development. While technological innovation is necessary to growth, it is as much a consequence of economic opportunity as it is a cause, and perhaps even more a follower of economic growth than a leader. Classification-JEL: O40, N10, O30 Keywords: Technological Change, Growth, Productivity Growth, 19th Century Economic Growth, Productivity Slowdown, Post-1973, Prosperity Pages: 81-84 Volume: 8 Year: 2004 Month: Spring File-URL: http://www.csls.ca/ipm/8/review-e.pdf File-Format: Application/pdf File-Size: 153 KB File-URL: http://www.csls.ca/ipm/8/review-f.pdf File-Function: version en français, pp:83-86 File-Format: Application/pdf File-Size: 155 KB Handle: RePEc:sls:ipmsls:v:8:y:2004:8