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Capital, Labour and Productivity: What Role Do They Play in the Potential GDP Weakness of France, Germany and Italy?

In: Convergence or Divergence in Europe?

Author

Listed:
  • Antonio Bassanetti

    (Banca d’Italia)

  • Jörg Döpke

    (Deutsche Bundesbank)

  • Roberto Torrini

    (Banca d’Italia)

  • Roberta Zizza

    (Banca d’Italia)

Abstract

Summary The paper analyses the recent supply side developments in France, Germany, and Italy by employing a non-parametric approach to estimate potential GDP. The analysis reveals marked heterogeneity among the three countries with regard to the contribution of labour input. Similarities can be found, however, in the slowdown of capital accumulation and in the pronounced worsening of Total Factor Productivity growth. The paper is complemented by estimates of some measures of wage pressures and profitability in order to assess the role played by the movements of relative input prices in the intensity of use of primary factors in the production process.

Suggested Citation

  • Antonio Bassanetti & Jörg Döpke & Roberto Torrini & Roberta Zizza, 2006. "Capital, Labour and Productivity: What Role Do They Play in the Potential GDP Weakness of France, Germany and Italy?," Springer Books, in: Convergence or Divergence in Europe?, pages 123-159, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-32611-3_8
    DOI: 10.1007/3-540-32611-1_8
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    References listed on IDEAS

    as
    1. Antonio Bassanetti & Massimiliano Iommi & Cecilia Jona-Lasinio & Francesco Zollino, 2004. "La crescita dell'economia italiana negli anni novanta tra ritardo tecnologico e rallentamento della produttivit�," Temi di discussione (Economic working papers) 539, Bank of Italy, Economic Research and International Relations Area.
    2. Apel, Mikael & Jansson, Per, 1999. "A theory-consistent system approach for estimating potential output and the NAIRU," Economics Letters, Elsevier, vol. 64(3), pages 271-275, September.
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    9. Roberto Torrini, 2005. "The profit share and return on capital in Italy: a tentative interpretation," Temi di discussione (Economic working papers) 551, Bank of Italy, Economic Research and International Relations Area.
    10. Olivier Blanchard, 2006. "European unemployment: the evolution of facts and ideas [‘The macroeconomics of low inflation’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 21(45), pages 6-59.
    11. Francesco Daveri & Cecilia Jona-Lasinio, 2005. "Italy's Decline: Getting the Facts Right," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(4), pages 365-410, December.
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    15. Barro, Robert J, 1999. "Notes on Growth Accounting," Journal of Economic Growth, Springer, vol. 4(2), pages 119-137, June.
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    Citations

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    Cited by:

    1. Alfonso Rosolia & Roberto Torrini, 2007. "The generation gap: relative earnings of young and old workers in Italy," Temi di discussione (Economic working papers) 639, Bank of Italy, Economic Research and International Relations Area.
    2. Roberto Torrini, 2015. "Labour, Profit and Housing Rent Shares in Italian GDP: Long-Run Trends and Recent Patterns," Politica economica, Società editrice il Mulino, issue 3, pages 275-314.
    3. Andrea Brandolini & Piero Casadio & Piero Cipollone & Marco Magnani & Alfonso Rosolia, 2007. "Employment Growth in Italy in the 1990s: Institutional Arrangements and Market Forces," AIEL Series in Labour Economics, in: Nicola Acocella & Riccardo Leoni (ed.), Social Pacts, Employment and Growth. A Reappraisal of Ezio Tarantelli’s Thought, edition 1, chapter 4, pages 31-68, AIEL - Associazione Italiana Economisti del Lavoro.
    4. Antonio Bassanetti & Michele Caivano & Alberto Locarno, 2010. "Modelling Italian potential output and the output gap," Temi di discussione (Economic working papers) 771, Bank of Italy, Economic Research and International Relations Area.
    5. Anna Zolotareva & Anastasia Kireeva & Tatiana Malinina, 2012. "Special Forms of Support of the Innovation Activity in Russia," Published Papers 171, Gaidar Institute for Economic Policy, revised 2013.
    6. Libero Monteforte & Giordano Zevi, 2016. "An inquiry into manufacturing capacity in Italy after the double-dip recession," Questioni di Economia e Finanza (Occasional Papers) 302, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    Potential output; growth accounting; productivity; NAIRU; factor shares;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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