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Has Trend Productivity Growth Increased in Canada? * Benoît Robidoux Economic Studies and policy Analysis Division Economic and Fiscal Policy Branch Department of Finance Canada, Ottawa Bing-Sun Wong Economic Analysis and Forecasting Division Economic and Fiscal Policy Branch Department of Finance Canada, Ottawa April 2003 ABSTRACT It is still often argued that, in contrast to the United States where labour productivity growth accelerated markedly in the second half of the 1990s, there is no strong evidence of such acceleration in Canada. This paper argues that a significant acceleration in labour productivity growth also occurred in Canada but somewhat later than in the U.S. This view is further examined by estimating Canada’s trend labour productivity growth within a neo-classical growth accounting framework. Our results suggest that trend labour productivity growth has indeed increased steadily since the early 1990s, reaching about 2 per cent in recent years, in line with recent estimates for the United States. This productivity improvement reflects both increased machinery and equipment capital deepening and TFP growth. JEL classification code: O3, O4, O5 _______________________ * We thank Richard Landry from Investment and Capital Stock Division, Statistics Canada for kindly providing data on ICT capital stocks and Andrew Sharpe for comments. To some extent, this paper provides an update to Muir and Robidoux (2001). However, the methodology is different