DP1087 Europe's Golden Age: An Econometric Investigation of Changing Trend Rates of Growth

Author(s):	Nicholas Crafts, Terence C Mills
Publication Date:	January 1995
Keyword(s):	Economic Growth, Segmented Trend, Unit Root
JEL(s):	C32, O47, O52
Programme Areas:	Human Resources
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=1087

This paper examines growth in output per person in 17 OECD countries from the late nineteenth century to 1989 considering the possibility of several breaks in trend. In all cases the unit root hypothesis is rejected in favour of a segmented trend stationary alternative. 1951-73 is shown to be an epoch of exceptionally rapid economic growth in Western Europe and this seems to result both from catch-up and from reconstruction. With one exception, recent income levels in Western Europe are found to be higher than would have been expected on the basis of extrapolating the pre-1914 trend growth rate.