Medium and long run prospects for UK growth in the aftermath of the financial crisis

Oulton, Nicholas (2013) Medium and long run prospects for UK growth in the aftermath of the financial crisis. CFM discussion paper series, CFM-DP2013-7. Centre For Macroeconomics , London, UK.

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Abstract

In this paper I argue that the financial crisis is likely to have a long term impact on the level of labour productivity in the UK while leaving the long run growth rate unaffected. Based entirely on pre-crisis data, and using a two-sector growth model, I project the future growth rate of GDP per hour in the market sector to be 2.61% p.a. Based on a cross-country panel analysis of 61 countries over 1950-2010, the permanent reduction in the level of GDP per worker resulting from the crisis could be substantial, about 5½%. The cross-country evidence also suggests that there are permanent effects on employment, implying a possibly even larger hit to the level of GDP per capita of about 9%.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://www.centreformacroeconomics.ac.uk/Home.aspx
Additional Information:	© 2013 The Author
Library of Congress subject classification:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
Journal of Economic Literature Classification System:	E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations; Cycles H - Public Economics > H6 - National Budget, Deficit, and Debt > H62 - Deficit; Surplus J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
Sets:	Research centres and groups > Centre for Macroeconomics
Identification Number:	CFM-DP2013-7
Date Deposited:	24 Jul 2014 14:23
URL:	http://eprints.lse.ac.uk/58239/

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