Application of multi-level analysis in modeling economy productivity

Abstract

The purpose of the paper is to examine the factor that influence the productivity in the EU Member States. In the paper a multi-level analysis was applied. The research showed that the systematic transformation of the economy towards modern branches in favor of the traditional ones caused an increase in productivity. On the other hand, it is impossible to completely replace the former. Hence, the most appropriate direction seems to be a gradual increase in efficiency in underdeveloped sectors of the economy without abandoning them entirely. What is especially interesting, it was found that positive changes in final consumption expenditure of general government negatively affect productivity. Thus, there is a dilemma related to the scope of the impact of fiscal policy and regulations in the economy.