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The United States As A Growth Leader For The Euro Area - A Multi-Sectoral Approach

Download Now Date Added: Nov 2009
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In this paper the authors examine the role played by technology spillovers between the United States and the Euro area. The authors explicitly assume that the United States acts as a growth leader for Europe and that the Euro area is constantly converging to US Total Factor Productivity (TFP) levels. As a result, a growing divergence in the level of US TFP vis-'a-vis that of Europe results in an increase in the growth rate of Euro area TFP. The model is applied to TFP data from 26 sub sectors of both economies. The role of greater ICT adoption in increasing Euro area TFP is also explored.