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Financial markets did not detect the deterioration of structural productivity trends in the early 2000s early enough

A fascinating analysis of economic conditions prior to 2007, sugesting that dropping productivity and the concurrent increase in asset prices contributed at least in part to the economic crisis, yet was not picked up by the market.

Productivity and the crisis: Revisiting the fundamentals | Vox

Most narratives of the crisis start with problems in the financial sector that then spilled over into the real economy. This column looks at the real side first and shows that labour productivity growth declined significantly in the years prior to the crisis, particularly in the US construction sector. Financial markets may have failed in that they didn’t detect the deterioration of structural productivity trends in the early 2000s.

Written by Colin Henderson

August 14, 2009 at 15:29

Posted in economy

Tagged with , ,

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  1. […] Hat tip – BankWatch. […]


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