The Results of My Model

Abstract

TFP has been on a long-term declining trend and over the most recent thirty- and twenty-year periods has run at 0.9 per cent per annum and 0.8 per cent per annum. Since 1980 TFP has fluctuated around these levels without any clear trend. Compared with estimates from the Congressional Budget Office and other forms of the consensus model, the model described in this book shows large differences. The figures for TFP are significantly lower and on occasion show a different change in direction. The contribution of TFP to labour productivity fell from nearly 100 per cent in the early post-war years to 60 per cent in 2016. Favourable changes in NTV have thus contributed 40 per cent of the improvement in labour productivity over the past twenty years. We are therefore not solely at the mercy of changes in technology but can enhance growth by changes in policy.