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Estimating trends in Australia's productivity

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Productivity trends greatly influence the future size of an economy, its ability to meet the challenges of an ageing population, and the setting of both fiscal and monetary policies. This paper estimates trend growth in productivity (GDP per hour worked) in Australia since the late 1970s. Results suggest that trend productivity growth increased markedly during the 1990s. Since that time, however, trend productivity growth has weakened — our estimates suggest that productivity has grown at an annual average trend rate of between 1.5 and 1.8 per cent since the economic slowdown in 2000.