Gone with the Headwinds: Global Productivity

By Gustavo Adler, Romain A Duval, Davide Furceri, Sinem Kılıç Çelik, Ksenia Koloskova, Marcos Poplawski Ribeiro

April 3, 2017

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Gustavo Adler, Romain A Duval, Davide Furceri, Sinem Kılıç Çelik, Ksenia Koloskova, and Marcos Poplawski Ribeiro. Gone with the Headwinds: Global Productivity, (USA: International Monetary Fund, 2017) accessed December 31, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

Productivity growth—the key driver of living standards—fell sharply following the global financial crisis and has remained sluggish since, adding to a slowdown already in train before. Building on new research, this note finds that the productivity slowdown reflects both crisis legacies and structural headwinds. In advanced economies, the global financial crisis has led to “productivity hysteresis”—persistent productivity losses from a seemingly temporary shock. Behind this are balance sheet vulnerabilities, protracted weak demand and elevated uncertainty, which jointly triggered an adverse feedback loop of weak investment, weak productivity and bleak income prospects. Structural headwinds—already blowing before the crisis—include a waning ICT boom and slowing technology diffusion, partly reflecting an aging workforce, slowing global trade and weaker human capital accumulation. Reviving productivity growth requires addressing remaining crisis legacies in the short run while pressing ahead with structural reforms to tackle longer-term headwinds.

Subject: Capital productivity, Financial crises, Global financial crisis of 2008-2009, Labor productivity, Production, Productivity, Total factor productivity

Keywords: Capital productivity, Europe, Global, Global financial crisis of 2008-2009, Growth, Labor market, Labor Productivity, Loss-making firm, Productivity, Productivity growth, Productivity slowdown, SDN, TFP decomposition, TFP gain, TFP growth, TFP hysteresis, TFP slowdown, Total factor Productivity

Publication Details

Pages:

98
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2017/004
Stock No:

SDNEA2017004
ISBN:

9781475589672
ISSN:

2617-6750

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