Hybrid seminar: The Productivity Slowdown in Advanced Economies: Common Shocks or Common Trends

This paper reviews the productivity slowdown across advanced economies and assesses the merits of different arguments. The emphasis is on large European countries and the United States and emphasizes how declines in total factor productivity growth since the mid-2000s is key in understanding slower growth. Though measurement challenges, on the role of intangible assets or the precise ranking of productivity levels, can affect the details, the overall pattern is of a stagnating productivity frontier and lack of convergence to that frontier. The key hypotheses in understanding this slowdown are the shock of the Great Financial Crisis or common slowdown in productivity trends; distinguishing these theoretically or empirically is hard, but the persistence of the slowdown suggests a common trend slowdown is at least a contributing factor. The productivity growth pattern since the start of the Covid-19 pandemic has been erratic due to lockdowns, but the overall trend from before 2020 seems to persist.