CAPITAL AND TRADE AS ENGINES OF GROWTH IN FRANCE - AN APPLICATION OF JOHANSEN COINTEGRATION METHODOLOGY

An aggregate production function is estimated using recent cointegrati ng techniques particularly appropriate for estimating long-run relatio nships. The empirical results suggest that the growth of output in Fra nce has been spurred by increased trade integration within the Europea n Community and by the accumulation not only of business sector capita l-the only measure of capital included in most empirical studies-but a lso by government infrastructure capital, residential capital, and res earch and development capital. Calculations of potential output indica te that trade and capital-broadly defined-account for all of the growt h in the French economy during the past two decades.