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Lessons for Europe from the U.S. Growth Resurgence

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  • Dale W Jorgenson
  • Mun S Ho
  • Kevin J Stiroh

Abstract

This paper analyses the sources of U.S. labour productivity growth in the late 1990s and presents projections for both output and labour productivity growth. We show that investment in information technology (IT) played a substantial role in the U.S. productivity revival and that similar trends are evident in data for other leading OECD countries. We then outline a methodology for projecting trend output and productivity growth for the broadly defined U.S. economy. Our base-case projection puts trend productivity growth at 1.78 percent per year over the next decade with a range of 1.14 to 2.38 percent, reflecting fundamental uncertainties about the rate of technical progress in IT-production and investment in IT-equipment and software. Our central projection is below the average growth rate of 2.07 percent during 1995 -2000. Similar projections for Europe must await more complete information. (JEL J2)

Suggested Citation

  • Dale W Jorgenson & Mun S Ho & Kevin J Stiroh, 2003. "Lessons for Europe from the U.S. Growth Resurgence," CESifo Economic Studies, CESifo Group, vol. 49(1), pages 27-47.
    • Handle: RePEc:oup:cesifo:v:49:y:2003:i:1:p:27-47.
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    File URL: http://hdl.handle.net/10.1093/cesifo/49.1.27
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    Citations

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    Cited by:

    1. Bart van Ark & Robert Inklaar & Robert H. McGuckin, 2003. "ICT and Productivity in Europe and the United States Where Do the Differences Come From?," CESifo Economic Studies, CESifo Group, vol. 49(3), pages 295-318.
    2. Indjikian, Rouben & Siegel, Donald S., 2005. "The Impact of Investment in IT on Economic Performance: Implications for Developing Countries," World Development, Elsevier, vol. 33(5), pages 681-700, May.
    3. Ellen R. McGrattan & Edward C. Prescott, 2005. "Productivity and the post-1990 U.S. economy," Review, Federal Reserve Bank of St. Louis, vol. 87(Jul), pages 537-550.
    4. Andreas Kuhlmann, 2007. "Essays on network industries : privatization, regulation, and productivity measurement," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 26.
    5. Raquel Ortega-Argilés & Mariacristina Piva & Marco Vivarelli, 2014. "The transatlantic productivity gap: Is R&D the main culprit?," Canadian Journal of Economics, Canadian Economics Association, vol. 47(4), pages 1342-1371, November.
    6. van Ark, Bart & Smits, Jan Pieter, 2005. "Technology Regimes and Productivity Growth in Europe and the United States: A Comparative and Historical Perspective," Institute of European Studies, Working Paper Series qt1td1h23k, Institute of European Studies, UC Berkeley.
    7. Welfe, Wladyslaw, 2011. "Long-term macroeconometric models: The case of Poland," Economic Modelling, Elsevier, vol. 28(1-2), pages 741-753, January.
    8. Dimelis, Sophia P. & Papaioannou, Sotiris K., 2011. "ICT growth effects at the industry level: A comparison between the US and the EU," Information Economics and Policy, Elsevier, vol. 23(1), pages 37-50, March.
    9. Lach, Saul & Trajtenberg, Manuel & Shiff, Gil, 2008. "Together but Apart: ICT and Productivity Growth in Israel," CEPR Discussion Papers 6732, C.E.P.R. Discussion Papers.
    10. Welfe, Wladyslaw, 2011. "Long-term macroeconometric models," Economic Modelling, Elsevier, vol. 28(1), pages 741-753.

    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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