The productivity gap among European countries.

This paper aims at analyzing Total Factor Productivity (TFP) in four European countries (France, Germany, Italy and the Netherlands) between 1950 and 2011. It uses the common trend - common cycle approach to decompose series in trends and cycles. We find that the four economies share three common trends and a common cycle. Further, we show that in the case of Italy and the Netherlands trend and cycle innovations have a negative relationship that supports the 'opportunity cost' approach to productivity growth, and that trend innovations are generally larger than cycle innovations. Finally, while we do not explore what drives the three common trends, we show that countries' differences in TFP performance in recent years may be due to the so-called "deep"determinants in growth literature such as the presence of efficient mechanisms of creation and transmission of knowledge, international integration, and ecient markets and institutions.