Euro-Area Productivity Suffers From Static Corporate Sector, Bundesbank Says

A significant decline of company start-ups and closures in recent years may help explain the slowdown in euro-area productivity growth that’s weighing on the minds of policymakers, according to Bundesbank research.

Market entrants and exits “play an important role in the allocation of scarce production factors to productive uses,” researchers at the German central bank said in an article published on Tuesday. “If allocative efficiency declines as business dynamism declines, this can inhibit productivity growth.”