Output and Productivity. Estimates of the Kaldor-Verdoorn Effect in Austrian und EU Industrial Production

Empirical estimates of the Kaldor-Verdoorn effect in Austria and the EU by means of time series econometric techniques show that an increase of industrial production by 1 percent leads to an increase of labour productivity by up to 0.5 percent. Endogenous reinforcement effects through capital accumulation and induced technical progress are revealed by impulse response functions. A longer period of weak industrial production, therefore, dampens productivity growth, long-run prosperity and competitiveness.