Growth and economic activity in OECD countries: A long-term perspective

Measured in terms of the growth rate of the real gross domestic product, Germany has had a particularly poor performance in recent years in an international comparison. Whether this reflects an unfavourable business-cycle development or whether this is a long-term growth weakness is examined in this article using a structural time series model. The model presents the contributions of the business cycle and the long-term GDP growth trend for different OECD countries from 1950 to 2004. The results show that the trend growth rate has decreased in all the analysed countries since the 1950s. The drop was especially strong in Germany, however. This means that the disappointing economic performance in Germany is the result of a low, long-term trend growth rate and points to structural problems that have existed in Germany for a long time.