FEEM Research Seminar on “Uncertainty in Long Run Forecasts of Productivity Growth”
12:00 - 13:30
Long-run forecasts of productivity growth and related uncertainty have become important in policy analysis. However, a thin long-run forecast literature has led to a practice of using ranges of point estimates to partially bound this uncertainty rather than fully parameterizing uncertainty in long-run growth rates. Building on methods established to use short-run forecasts in the growth literature, we use a sample of expert forecasts to study global and regional productivity growth rates (output per capita) for the periods 2010-2050 and 2010-2100. In our sample, the aggregate expectation for average growth rates between 2010-2100 is 2.06% per year, with a standard deviation of 1.12 percentage points. Results from this method indicate substantially higher uncertainty in global growth rates than what is implied by estimates used in existing policy research that are used to project the damages from global climate change. We discuss the strengths and limitations available estimates and implications for policy decisions.