Template-Type: ReDIF-Paper 1.0
Author-Name: Lin Shao
Author-X-Name-First: Lin
Author-X-Name-Last: Shao
Author-Name: Rongsheng Tang
Author-X-Name-First: Rongshen
Author-X-Name-Last: Tang
Title: Allocative efficiency and the productivity slowdown
Abstract: This paper evaluates the contribution of cross-sector allocative efficiency to the productivity slowdown in the US during the 1970s and 2000s. We extend the framework of Oberfield (2013) to derive sufficient statistics for allocative efficiency and decompose aggregate productivity growth in a multi-sector economy with or without input-output linkages. We find approximately two-thirds of the productivity slowdown can be explained by the lack of improvement in allocative efficiency. Furthermore, data shows that increased sector-level volatility is associated with the deterioration of allocative efficiency.
Creation-Date: 2024-05
File-URL: https://www.bis.org/publ/work1185.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1185.htm
File-Format: text/html
Number: 1185
Keywords: productivity slowdown, allocative efficiency, volatility, adjustment costs
Classification-JEL: O47, E23
Handle: RePEc:bis:biswps:1185