On the Growth Slowdown in Developed Economies
On the Growth Slowdown in Developed Economies

Summary/Abstract: After the Global Financial Crisis of 2008, the long-run growth patterns in developed economies have been under closer academic scrutiny because of dismal prospects of growth slowdown and secular stagnation. There exist various conflicting views on whether this slowdown of growth rates started prior to the Global Financial Crisis or not. Moreover, the debate is extended concerning the source of this slowdown, arguing the pace of innovation. This paper presents an investigation of the structure of long-run growth patterns for a large set of countries using empirical methods to directly test whether and to what extent long-run growth slowed down in developed economies. Our findings show that, in high-income economies, the long-run growth rates of GDP per capita, GDP per worker and TFP exhibit clear declining trends over the period 1970-2019. Furthermore; the statistical significance of growth slowdown is not sensitive to (i) country classification criteria (D1: high-income countries according to World Bank, D2: high-income countries according to United Nations, and D3: OECD member countries), and (ii) the estimation method (fixed effects versus random effects).

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