Potential output growth in several industrialised countries: a comparison

In this paper, we present international comparisons of potential output growth among several economies —Canada, the euro area, France, Germany, Italy, Japan, the Netherlands, the United Kingdom, and the United States— for the period 1991-2004. The main estimates rely on a structural approach where output of the whole economy is described by a Cobb-Douglas function. This framework enables us to take temporal considerations into account, depending on the assumed volatility of potential output. Moreover, this study presents two original features, in other words, the construction of consistent and homogenous capital stock series, and long-run estimates including capital-deepening effects based on a stable capital/output ratio in value terms, whereas standard estimations assume a stable ratio in volume terms. Lastly, we use univariate methods as a benchmark. Even though the final estimates are obviously sensitive to each method and the assumptions made for each of them, this paper might help to understand why some economies remained below their potential growth rate during the recent period by identifying the sources of long-run potential growth. JEL Classification: C51, E32, O11, O47age of equipments, potential growth, production function, total factor productivity

Potential output growth in several industrialised countries: a comparison

In this paper, we present international comparisons of potential output growth among several economies -Canada, the euro area, France, Germany, Italy, Japan, the Netherlands, the United Kingdom, and the United States- for the period 1991-2004, for which we construct consistent and homogenous capital stock series. The main estimates rely on a structural approach where output of the whole economy is described by a Cobb-Douglas function and Total Factor Productivity (TFP) is estimated allowing for possible breaks in the deterministic trend. The results confirm that over the considered period the potential GDP growth has been faster in the United States than in other studied countries, reflecting a combination of higher labour contribution and faster TFP growth. Overall, this paper might help to shed some light on cross-country differences in economic performance over the recent period.potential growth ; production function ; total factor productivity ; age of equipments

Competition, R&D and the cost of innovation

This paper proposes a model in the spirit of Aghion and al. (2005) that relates the magnitude of the impact of competition on R&D to the cost of innovation. The effect of competition on R&D is an inverted U-shape. However, the shape is flatter and competition policy is therefore less relevant for innovation when innovations are relatively costly. Intuitively, if innovations are costly for a firm, competitive shocks have to be significant to alter its innovation decisions. Empirical investigations using a unique panel dataset from the Banque de France show that an inverted U-shaped relationship can be clearly evidenced for the largest firms, but the curve becomes flatter when the relative cost of R&D increases. For large costs, the relationship even vanishes.competition ; R&D ; innovation

Issues on potential growth measurement and comparison: how structural is the production function approach?

This article aims to better understand the factors driving fluctuations in potential output measured by the production function approach (PFA.) To do so, the authors integrate a production function definition of potential output into a large-scale dynamic stochastic general equilibrium (DSGE) model in a fully consistent manner and give two estimated versions based on U.S. and euro-area data. The main contribution of this article is to provide a quantitative and comparative assessment of two approaches to potential output measurement, namely DSGE and PFA, in an integrated framework. The authors find that medium-term fluctuations in potential output measured by the PFA are likely to result from a large variety of shocks, real or nominal. These results suggest that international comparisons of potential growth using the PFA could lead to overstating the role of structural factors in explaining cross-country differences in potential output, while neglecting the fact that different economies are exposed to different shocks over time.Economic development ; Economic conditions

Potential output growth in several industrialised countries: a comparison

In this paper, we present international comparisons of potential output growth among several economies -Canada, the euro area, France, Germany, Italy, Japan, the Netherlands, the United Kingdom, and the United States- for the period 1991-2004, for which we construct consistent and homogenous capital stock series. The main estimates rely on a structural approach where output of the whole economy is described by a Cobb-Douglas function and Total Factor Productivity (TFP) is estimated allowing for possible breaks in the deterministic trend. The results confirm that over the considered period the potential GDP growth has been faster in the United States than in other studied countries, reflecting a combination of higher labour contribution and faster TFP growth. Overall, this paper might help to shed some light on cross-country differences in economic performance over the recent period.Nous présentons dans cet article une comparaison internationale de croissance potentielle entre plusieurs économies - Canada, zone euro, France, Allemagne, Italie, Royaume-Uni et Etats-Unis- sur la période 1991-2004, pour lesquelles nous construisons des séries cohérentes et homogènes de stock de capital. Les principaux résultats des estimations reposent sur une approche structurelle dans laquelle la production d'une économie est décrite par une fonction de production Cobb-Douglas et une productivité globale des facteurs (PGF) estimée autour d'une tendance déterministe susceptible de présenter des ruptures. Les résultats confirment que sur la période d'investigation, la croissance potentielle a été plus rapide aux Etats-Unis que dans les autres économies considérées, combinant une plus forte contribution de l'emploi et une croissance de la PGF plus rapide. De plus, ce papier permet de mettre en lumière des différences internationales de performance économique sur la période récente

Competition, R&D and the cost of innovation

This paper proposes a model in the spirit of Aghion and al. (2005) that relates the magnitude of the impact of competition on R&D to the cost of innovation. The effect of competition on R&D is an inverted U-shape. However, the shape is flatter and competition policy is therefore less relevant for innovation when innovations are relatively costly. Intuitively, if innovations are costly for a firm, competitive shocks have to be significant to alter its innovation decisions. Empirical investigations using a unique panel dataset from the Banque de France show that an inverted U-shaped relationship can be clearly evidenced for the largest firms, but the curve becomes flatter when the relative cost of R&D increases. For large costs, the relationship even vanishes.Ce papier propose un modèle dans l'esprit d'Aghion et al. (1995). Il relie la sensibilité de la R&D à la concurrence, au coût des innovations. Plus les innovations sont coûteuses, plus les chocs concurrentiels doivent être importants pour modifier le comportement des entreprises. L'exploitation empirique de données d'un vaste panel d'entreprises de la Banque de France conforte cet argument. Elle exhibe une relation en U-inversé entre concurrence et innovation pour les grandes entreprises mais cette relation est plus plate lorsque le coût d'innover relativement à la taille de l'entreprise augmente

Ludwig: A parallel Lattice-Boltzmann code for complex fluids

This paper describes `Ludwig', a versatile code for the simulation of Lattice-Boltzmann (LB) models in 3-D on cubic lattices. In fact `Ludwig' is not a single code, but a set of codes that share certain common routines, such as I/O and communications. If `Ludwig' is used as intended, a variety of complex fluid models with different equilibrium free energies are simple to code, so that the user may concentrate on the physics of the problem, rather than on parallel computing issues. Thus far, `Ludwig''s main application has been to symmetric binary fluid mixtures. We first explain the philosophy and structure of `Ludwig' which is argued to be a very effective way of developing large codes for academic consortia. Next we elaborate on some parallel implementation issues such as parallel I/O, and the use of MPI to achieve full portability and good efficiency on both MPP and SMP systems. Finally, we describe how to implement generic solid boundaries, and look in detail at the particular case of a symmetric binary fluid mixture near a solid wall. We present a novel scheme for the thermodynamically consistent simulation of wetting phenomena, in the presence of static and moving solid boundaries, and check its performance.Comment: Submitted to Computer Physics Communication

The Bank for the Accounts of Companies Harmonized (BACH) database

The Bank for the Accounts of Companies Harmonized (BACH) is a free-of-charge database containing the aggregated accounting data of non-financial incorporated enterprises for, so far, 11 European countries. While the individual accounts feeding the database were originally prepared in line with national accounting standards consistent with European Accounting Directives, they have been harmonised with a view to preserving, to the greatest extent possible, the cross-country comparability of the resulting data. This article presents the methodology underpinning BACH, including the content of the database. It describes the characteristics of national samples and outlines the harmonisation process. BACH is a unique tool for analysing and comparing the financial structure and performance of firms across European countries. A simple case study is also presented in support

The Long-Run Effects of Fiscal Rebalancing in a Heterogeneous-Agent Model

This paper evaluates the long-run economic effects of a fiscal rebalancing reform, namely a policy consisting in increasing consumption taxes and simultaneously lowering payroll taxes, all this in a budget neutral way. To this end, we construct a heterogeneous-agent model and compare the pre- and post-reform steady states. The model is calibrated on French data to reproduce key characteristics of disposable income and net wealth distributions. We compare the outcomes of the reform under the benchmark model with those arising in its representative-agent version. Our results indicate that while the fiscal febalancing reform stimulates aggregate labor and capital, (i) it has a larger effect on capital in the heterogeneous-agent model than in its representative-agent counterpart; (ii) it also exacerbates wealth inequality, where wealthier households capture the whole macroeconomic increase in capital. The results are left unaffected by various perturbations around the baseline calibration. Taking into account the transition between the two stady states, a welfare analysis suggests that the reform entails a welfare cost even though a majority of agents would benefit from it