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International Monetary Fund. European Dept.

–2012, TFP growth contracted in several key industries—manufacturing, construction, information and communication and real estate . The industry-level analysis suggests that the TFP contraction is not limited to a single industry (or firm), but a broader phenomenon. Nevertheless, the contraction in some key industries such as manufacturing and construction is noticeably large. Growth Accounting: Growth Rate of Value Added Volume (Contributions of sub-component to value added growth, percentage points) Sources: EU KLEMS, Fund staff calculations Notes: This

Mr. Ruy Lama, Carlos Urrutia, and Jorge Roldós

, significantly increases the contribution of separation costs to both GDP and measured TFP contractions. The intuition is that an increase in the threshold productivity ( ω ^ t ) during the recession implies with low curvature a smaller increase in the number of matches closed by the planner, hence a larger fall in TFP due to the (lack of) selection effect. Indeed, in this case the impact of firing costs on the fall of employment is close to zero. With a high curvature of 2 the effects are reversed and separation costs contribute more to the fall of employment and less to

International Monetary Fund. European Dept.

.K. Italian firms had the lowest TFP levels during the same period (at around -0.2). 10 Both French and German firms showed resilience during the crisis compared to their peers in the U.K. or Italy, which experienced a comparatively large TFP contraction in 2008-09 relative to 2001–07, but average TFP in France in 2008–09 was still lower than in Germany. Figure 6. Total Factor Productivity Source: EFIGE Suvery. 12. Low competitiveness in turn has led to export weakness . Based on export share (measured by the ratio of exports to turnover), French firms are the

International Monetary Fund. European Dept.
This Selected Issues paper on Finland discusses that the country is struggling to recover from the Great Recession, indicating that deeper, structural issues may be holding back growth. Estimates of potential output for Finland are an important part of the toolkit for policymakers—but they come with a degree of uncertainty. As this paper illustrates, the use of different methodologies and assumptions can lead to different results. However, there are indications that Finnish potential output growth is low at this juncture. From 1997 to 2007, potential growth, independent of the choice of smoothing, averages 3.2 percent per year. In 2013, that average has dropped to 0.2 with several of the models producing negative growth. This result indicates that the lack of a recovery in Finland is largely structural in nature. Therefore, any indication that the output gap is closing is due to falling potential rather than a pickup in growth. This leads to the advantages of structural reforms aiming to enhance Finland’s long-term capacity. Total factor productivity enhancing measures could be crucial in helping the economy recover despite the time it takes to implement them.
International Monetary Fund. European Dept.
This Selected Issues paper examines external developments and competitiveness in France. Over the past decade, the current account has deteriorated from a surplus of 1.2 percent of GDP in 2002 to a deficit of about 2.3 percent in 2012, as France lost ground in goods trade and services recorded just a slight increase in global market shares. The slight improvement of the trade deficit seen in 2012 may suggest a change in trend, although it is still too early to determine. Past deterioration in export performance points to competitiveness weaknesses, rooted in significant rigidities in labor and product markets.