Canada’s Potential Productivity and Output Growth: A Post-Crisis Assessment

International Productivity Monitor, No. 20, Fall 2010

19 Pages Posted: 8 Apr 2011

See all articles by Marcello M. Estevão

Marcello M. Estevão

International Monetary Fund (IMF) - Western Hemisphere Department

Date Written: December 1, 2010

Abstract

This study investigates the impact of the current financial crisis on Canada’s potential GDP growth. Using a simple accounting framework to decompose trend GDP growth into changes in capital, labour services, and total factor productivity, we find a sizeable drop in Canadian potential growth rate in the short term. The estimated decline of about 1 percentage point originates from a sharply decelerating capital stock accumulation (as investment has dropped steeply). However, over the medium term, we expect Canada’s potential GDP growth to gradually rise to around 2 per cent, below the pre-crisis growth rate, partly reflecting the effects of population aging.

Keywords: Canada, potential growth, TFP, financial crisis, labor productivity

JEL Classification: G01, D24, J24, O51, O16, O4

Suggested Citation

Estevao, Marcello M., Canada’s Potential Productivity and Output Growth: A Post-Crisis Assessment (December 1, 2010). International Productivity Monitor, No. 20, Fall 2010, Available at SSRN: https://ssrn.com/abstract=1803288

Marcello M. Estevao (Contact Author)

International Monetary Fund (IMF) - Western Hemisphere Department ( email )

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HQ1-10-115
Washington, DC 20431
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202-623-6038 (Phone)
202-589-6038 (Fax)

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