International Comparison of the Sources of Productivity Slowdown 1973 1982
This paper uses an integrated model of aggregate supply to analyze the post-1973 slowdown in productivity growth in the seven major OECD economies. Factor substitution, unexpected demand changes, profitability, and inventory disequilibrium all contribute to the explanation, which is based on a three-factor nested aggregate production function, including energy, and postulating Harrod-neutral disembodied technical progress. The model is first applied separately to the seven countries assuming constant (though country-specific) rates of technical progress. This model provides empirical evidence that this rate of progress has in fact slowed down for several of the faster-growing countries, even after adjusting for factor substitution and cyclical factors. The model is therefore re-estimated, and the sources of productivity decline recalculated, on the hypothesis that rates of efficiency growth in other countries are converging to those in the United States.
Helliwell, John F., Peter H. Sturm, and Gerard Salou. "International Comparison of the Sources of Productivity Slowdown 1973-1982." European Economic Review, Vol. 28, 1-2 (1985), pp. 157-191. citation courtesy of