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Revisiting Productivity Dynamics in Europe: A New Measure of Utilization-Adjusted TFP Growth

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  • Diego Comin
  • Javier Quintana
  • Tom Schmitz
  • Antonella Trigari

Abstract

We compute new estimates for Total Factor Productivity (TFP) growth in five European countries and in the United States. Departing from standard methods, we account for positive profits and use firm surveys to proxy for unobserved changes in factor utilization. These novelties have a major impact in Europe, where our estimated TFP growth series are less volatile and less cyclical than the ones obtained with standard methods. Based on our approach, we provide annual industry-level and aggregate TFP series, as well as the first estimates of utilization-adjusted quarterly TFP growth in Europe. JEL Codes: E01, E30, O30, O40

Suggested Citation

  • Diego Comin & Javier Quintana & Tom Schmitz & Antonella Trigari, 2023. "Revisiting Productivity Dynamics in Europe: A New Measure of Utilization-Adjusted TFP Growth," Working Papers 695, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    • Handle: RePEc:igi:igierp:695
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    Cited by:

    1. Diego Comin & Javier Quintana & Tom Schmitz & Antonella Trigari, 2021. "Measuring TFP: The role of profits, adjustment costs, and capacity utilization," Working Papers 2143, Banco de España.
    2. Henri Keränen & Sakari Lähdemäki, 2020. "Identification of fiscal SVARs in small open economies using trading partner forecast errors as instruments," Working Papers 330, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    3. Comin, Diego & Quintana Gonzalez, Javier & Schmitz, Tom & Trigari, Antonella, 2020. "Revisiting Productivity Dynamics in Europe: A New Measure of Utilization-Adjusted TFP Growth," CEPR Discussion Papers 15402, C.E.P.R. Discussion Papers.
    4. Gantert, Konstantin, 2022. "The Impact of Active Aggregate Demand on Utilization-Adjusted TFP," VfS Annual Conference 2022 (Basel): Big Data in Economics 264103, Verein für Socialpolitik / German Economic Association.
    5. Gantert, Konstantin, 2022. "The impact of active aggregate demand on utilisation-adjusted TFP," IWH Discussion Papers 9/2022, Halle Institute for Economic Research (IWH).
    6. Diego A. Comin & Javier Quintana Gonzalez & Tom G. Schmitz & Antonella Trigari, 2020. "A New Measure of Utilization-adjusted TFP Growth for Europe and the United States," NBER Working Papers 28008, National Bureau of Economic Research, Inc.
    7. Josh Martin & Kyle Jones, 2023. "An Occupation and Asset-Driven Approach to Capital Utilization Adjustment in Productivity Statistics," NBER Chapters, in: Technology, Productivity, and Economic Growth, National Bureau of Economic Research, Inc.
    8. Piton, Sophie, 2021. "Economic integration and unit labour costs," European Economic Review, Elsevier, vol. 136(C).
    9. Josh Martin & Kyle Jones, 2022. "An Occupation and Asset Driven Approach to Capital Utilisation Adjustment in Productivity Statistics," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2022-11, Economic Statistics Centre of Excellence (ESCoE).

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    More about this item

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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