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Catching up in total factor productivity through the business cycle : evidence from Spanish manufacturing surveys

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  • Alvaro Escribano

    ()

  • Rodolfo Stucchi

    ()

Abstract

Spain has recently experienced more than a decade of price stability and economic growth however now is showing one of the most significant slowdowns in economic activity of the EU economies. There is a general consensus that this slowdown in economic activity is particularly important in Spain due to the low level and low rates of growth experienced by total factor productivity (TFP) during more than a decade. Among the key policy elements that could enhance TFP of manufacturing firms in Spain we find those related to human capital, foreign direct investment, and process innovations. We evaluate the effect of recessions on the productivity growth of firms with different level of productivity. We present evidence on the dynamic of firm’s TFP through the business cycle allowing for a differentiated behavior for technological leaders and followers. We observe lower persistence and faster convergence in TFP during recessions and, higher persistence and non convergence in TFP during expansions. These empirical findings are consistent with the predictions obtained from the technological diffusion literature and from the fact that firm’s innovation is pro-cyclical. These conclusions are obtained from a microeconometric analysis of surveys of Spanish manufacturing firms (ESEE) from 1991 to year 2005.

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Bibliographic Info

Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we085125.

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Date of creation: Nov 2008
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Handle: RePEc:cte:werepe:we085125

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Keywords: Productivity catching up; Technology diffusion; Pro-cyclical innovation; Technological leaders; Business cycle;

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Cited by:
  1. Ball, V. Eldon & San Juan, Carlos & Ulloa, Camilo, 2012. "State Productivity Growth: Catching Up and the Business Cycle," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123334, Agricultural and Applied Economics Association.
  2. Daniela, Maggioni, 2011. "Productivity dispersion and its determinants: the role of import penetration," MPRA Paper 37154, University Library of Munich, Germany.
  3. Dolado, Juan J. & Ortigueira, Salvador & Stucchi, Rodolfo, 2012. "Does dual employment protection affect TFP? Evidence from Spanish manufacturing firms," CEPR Discussion Papers 8763, C.E.P.R. Discussion Papers.
  4. Alessio, Moro & Rodolfo, Stucchi, 2011. "Heterogeneous Productivity Shocks, Elasticity of Substitution and Aggregate Fluctuations," MPRA Paper 29032, University Library of Munich, Germany.
  5. Dolado, Juan J. & Stucchi, Rodolfo, 2008. "Do Temprary Contracts Affect TFP? Evidence from Spanish Manufacturing Firms," CEPR Discussion Papers 7055, C.E.P.R. Discussion Papers.
  6. V. Eldon Ball & Carlos San Juan Mesonada & Camilo A. Ulloa, 2011. "Agricultural productivity in the United States: catching-up and the business cycle," Economics Working Papers we1116, Universidad Carlos III, Departamento de Economía.

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