U.S. Total Factor Productivity Slowdown : Evidence from the U.S. States

Author/Editor:

Roberto Cardarelli ; Lusine Lusinyan

Publication Date:

May 28, 2015

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Total factor productivity (TFP) growth began slowing in the United States in the mid-2000s, before the Great Recession. To many, the main culprit is the fading positive impact of the information technology (IT) revolution that took place in the 1990s. But our estimates of TFP growth across the U.S. states reveal that the slowdown in TFP was quite widespread and not particularly stronger in IT-producing states or in those with a relatively more intensive usage of IT. An alternative explanation offered in this paper is that the slowdown in U.S. TFP growth reflects a loss of efficiency or market dynamism over the last two decades. Indeed, there are large differences in production efficiency across U.S. states, with the states having better educational attainment and greater investment in R&D being closer to the production “frontier.”

Series:

Working Paper No. 15/116

Subject:

English

Publication Date:

May 28, 2015

ISBN/ISSN:

9781513520834/1018-5941

Stock No:

WPIEA2015116

Format:

Paper

Pages:

24

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