Productivity and Potential Growth in the United States and Europe

At the request of the European Central Bank, Martin N. Baily presented his work at a conference in Frankfurt, in January 2008.  His presentation examined productivity and potential growth in the United States and the European Union for the whole economy and by industry.  It highlighted the fact that potential growth has slowed in both regions, a surprising result for Europe.  In addition, over the period 1995-2005 productivity grew more rapidly in the United States than in the European Union in both manufacturing and service industries, although the disparity in service performance was more important in explaining faster overall U.S. growth.