The productivity growth slowdown and Kaldor's growth facts

Georg Duernecker, Berthold Herrendorf, Ákos Valentinyi

Research output: Contribution to journalArticlepeer-review

Abstract

The productivity growth slowdown that started in the 1970s presents a challenge to Kaldor's growth facts and the one-sector growth model. We ask: What natural modification of the growth model can generate a prolonged productivity growth slowdown? We show that the two-sector version with separate consumption and investment sectors has a balanced growth path equilibrium along which productivity growth slows down if two conditions hold: real GDP is measured with the Fisher index; productivity growth in the consumption sector slows down. We also show that real GDP measured with the Fisher index is a welfare measure in the two-sector version.

Original languageEnglish (US)
Article number104200
JournalJournal of Economic Dynamics and Control
Volume130
DOIs
StatePublished - Sep 2021
Externally publishedYes

Keywords

  • Fisher index
  • Kaldor's growth facts
  • Productivity growth slowdown
  • Two-sector growth model

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics

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