Productivity and GDP: international evidence of persistence and trends over 130 years of data

Abstract

The degree of persistence of the real gross domestic product per capita, total factor productivity and labour productivity has been examined in a group of 23 developed and developing nations, as well as the overall Euro Area, by evaluating the order of integration of the macroeconomic series over the annual period from 1890 to 2019. As against the conventional use of using integer degrees of differentiation (i.e., 0 for stationary processes and 1 in case of unit roots), fractional values have been utilized. The empirical findings suggest evidence for mean reversion in both total factor productivity and the real gross domestic product per capita in Chile, Germany, Netherlands and New Zealand. The results further suggest that mean reversion only occur in labour productivity of Australia. The non-linearity analysis shows that nonlinearity in the three series occur only in the U.S and also in two of the three series in Chile, Spain and Mexico. The policy implications of the results are enumerated in the body of the paper.