Wilson Au-Yeung, Michael Kouparitsas, Nghi Luu and Dhruv Sharma¹

Treasury Working Paper² 2013–02

Date created: 18 October 2013

Date modified: 10 January 2014

Abstract

This paper develops a framework for projecting GDP growth of Australia’s trading partners over the period from 2012 to 2050. The framework draws heavily on the existing conditional growth literature, including long-standing estimates of key convergence parameters. It adds to the large amount of research in this area by providing estimates of the long-run relative productivity level for 155 countries. We use a novel non-parametric approach that combines the World Economic Forum’s ordinal measure of long-run relative productivity (the ‘Global Competiveness Index’) and actual observed productivity to produce a cardinal measure of long-run relative productivity.

JEL Classification Numbers: F01, O40, O50
Keywords: China, India, conditional convergence

Wilson Au-Yeung, Nghi Luu and Dhruv Sharma
International Economy Division
Macroeconomic Group
The Treasury
Langton Crescent
Parkes ACT 2600

Michael Kouparitsas
Domestic Economy Division
Macroeconomic Group
The Treasury
Langton Crescent
Parkes ACT 2600

1 Au-Yeung, Luu and Sharma: International Economy Division, Kouparitsas: Domestic EconomyDivision, The Treasury, Langton Crescent, Parkes ACT 2600, Australia. We thank participants at the Macroeconomic Group Macroeconomic Theory and Application Seminar, Nathan Deutscher, Owen Freestone, David Gruen, Paul Hubbard, Bonnie Li and Nu Nu Win for helpful suggestions on an earlier draft.

2 The views expressed in this paper are those of the authors and do not necessarily reflect those of The Australian Treasury or the Australian Government.