Does Australia have a Productivity Growth Problem?
Ever since Paul Krugman stated that productivity was ‘almost everything', policy makers have been obsessed with improving it. This focus has led to a great deal of policy confusion.
Productivity is important, but it is not an active policy variable that policy makers can easily manipulate. While it is possible for policy to impact the determinants of long?term economic growth, the returns to public policy in that space are quickly exhausted.