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Discussion on TFP Growth in Old and New Europe by Michael C. Burda and Battista Severgnini

Discussion on TFP Growth in Old and New Europe by Michael C. Burda and Battista Severgnini. Boštjan Jazbec Dubrovnik, June 2008. Contribution. Two alternative metods for calculating TFP 29 European economies Old Europe New Europe Eastern Europe Period from 1994 to 2003. Focus.

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Discussion on TFP Growth in Old and New Europe by Michael C. Burda and Battista Severgnini

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  1. Discussion on TFP Growth in Old and New Europe byMichael C. Burda and Battista Severgnini BoštjanJazbec Dubrovnik, June 2008

  2. Contribution Two alternative metods for calculating TFP 29 European economies Old Europe New Europe Eastern Europe Period from 1994 to 2003

  3. Focus Improvements in productivity or efficiency: • Factor mobility • Redeployment of resources because of structural change

  4. How to Measure Capital Stock? Surpass the problem by focusing on depreciation rate Guess about the “true” initial capital stock: • “mature” economy: capital-output ratio close to steady state • “transition” economy: 50 % below steady state

  5. Results (Table 4: 1998-2003) Two alternative methods (DS and GD) give on average lower estimates for TFP in Eastern Europe than ST approach. The opposite results for Old and New Europe.

  6. Eastern Europe Sample Is it really improvement in productivity for technological reasons or simply a consequence of massive labor and capital reallocation process? Problems with sample period: 1994-2003 Importance of sub-periods When did transition process end?

  7. Understanding Convergence Problems with Maastricht inflation criterion Is EUR only for “rich” enough economies? Endogeneity of OCA

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