The stock market appreciation – comparable in size to that seen in the United States – went hand in hand with a decline, not a rise, in the contribution of capital to measured productivity. And a contemporaneous steady decline in TFP throughout the decade has reinforced, rather than offset, the diminishing contribution of capital.
5 The euro area seems to have had its fair share of stock market turbulence, without enjoying the side benefit of improved supply conditions. The slowdown in trend productivity has been a primary determinant of the weak economic performance of the euro area.