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The Future of Productivity: Comment Dimitris Malliaropulos* Bank of Greece April 2016 *Chief Economist, Head of Economic Analysis and Research The distance to the global frontier has widened in the recession Source: Giuseppe Nicoletti 2 Greece: Rebalancing the economy Tradable sector gained a higher share in the economy. Change in relative prices favours rebalancing towards tradable sector (indices refer to tradable sector relative to non-tradable sector) Tradables: agriculture, industry, business and financial services, telecommunications and services related to tourism (transport and accommodation and restaurants). Non-tradables: else except public administartion and non-market services. Source: Eurostat, Bank of Greece calculations 3 Greece: Potential growth (accounting) Potential output growth decomposition (average annual growth rates) 1980-2008 2009-2015 2016-2030 1. α*(Δ labor force)*(1-u*) 0,72 0,00 0.10 2. α*Δ capital stock 0,90 -0,40 0.90 3. Δ TFP 0,55 -1,93 1.00 4. Potential growth (1+2+3) 2,18 -2,33 2.00 Potential growth: Δy* = α*Δ labor force*( 1- NAIRU) + (1-α)*Δ Capital stock+ ΔTFP Source: Bank of Greece estimates 4 Greece: GDP growth accounting Decomposition of potential growth 5.00 5 4.00 4 3.00 3 2.00 2 1.00 1 - 0 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 (1.00) -1 (2.00) -2 (3.00) -3 (4.00) -4 α*Δlabor force*(1-NAIRU) (1-α)*Δ capital stock TFP Potential growth Source: Eurostat, Ameco, Bank of Greece estimates 5 Total Factor Productivity Average growth 1960-2008 = 1.6% pa Source: Eurostat, Ameco 6