US-EU productivity differential at the industry level: the role of embodied technology progress

Project Information

DIFPROD

Grant agreement ID: 41815

Start date 1 January 2007

End date 31 December 2008

Funded under

• Human resources and Mobility in the specific programme for research, technological development and demonstration "Structuring the European Research Area" under the Sixth Framework Programme 2002-2006

Total cost € 0,00

EU contribution € 143 915,00

Coordinated by

EUROPEAN UNIVERSITY INSTITUTE
Italy

Final Activity Report Summary - DIFPROD (US-EU productivity differential at the industry level: the role of embodied technology progress.)

The research addresses the empirical aspects of the US-EU productivity differential, in order to explain the causes of the relatively poor performance of European countries productivity of the last decade. More in detail, the goal of the project is to establish and investigate some stylised facts about the behaviour of productivity in both the United States and the European Union, at the industry level, emphasising in particular the role of embodied technological progress. . More in detail, the goal of the project is to establish and investigate some stylised facts about the behaviour of productivity in both the United States and the European Union, at the industry level, emphasising in particular the role of embodied technological progress.

The project has resulted in the preparation of 7 papers, 2 of which are published in peer-reviewed journals and 1 as chapter in edit volume. Some of the deliverables are already published or on line, while the others papers are due in the coming months. The findings are therefore available to the scientific community and its quality has been checked through the blind peer-review process.

The results of the project highlight the importance of embodied technological progress in explaining business fluctuation. In fact, it has been shown that investment-specific technology shocks explain the main bulk of the aggregate productivity and that they affect investment and consumption sectors heterogeneously. We have also found the importance of the investment-specific shocks in explaining the dynamics of the labour market variables. Further, investigating the international propagation of productivity shocks, we provide evidence that the investment-specific shock is international in nature and that the US-EU productivity differential could be attributed to certain sluggishness in the transmission of the embodied productivity gains to the EU consumption goods.