Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/170670
Authors: 
Hartwig, Jochen
Krämer, Hagen
Year of Publication: 
2017
Series/Report no.: 
Chemnitz Economic Papers 010
Abstract: 
The year 2017 marks the 50th anniversary of William J. Baumol’s seminal model of ‘unbalanced growth’, which predicts the so-called ‘Growth Disease’, i.e., the tendency of aggregate productivity growth to slow down in the process of tertiarisation. In an important contribution published in 2001, however, Nicholas Oulton showed that the shift of resources to the service sector may raise rather than lower aggregate productivity growth if the service industries produce intermediate rather than final products. While Oulton’s reasoning is logically consistent, the question arises whether it is also valid from an empirical point of view. We use the 2011 release of EU KLEMS data to determine whether the shift of resources to services has raised or lowered aggregate productivity growth in the G7 countries.
Subjects: 
Baumol’s Disease
productivity growth
EU KLEMS
JEL: 
E24
O14
O41
O47
O57
Document Type: 
Working Paper
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