6  BIS central bankers’ speeches  From 2000–14 total factor productivity has grown by just 1.4% in the euro area, while in the US it has risen by 10.7%. Were productivity growth in the euro area to remain at such low levels, the set of profitable investment projects, even with very low long-run real rates, would not expand significantly.
In other words, raising productivity would make our monetary policy commensurately more powerful. Broadly speaking, total factor productivity can be raised either by firms innovating and adopting new technology, or by reallocating resources within and across sectors towards the most productive firms.