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

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Author Info
Álvaro Escribano Sáez ()
Rodolfo Stucchi ()

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

Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dolado, Juan José & Stucchi, Rodolfo, 2008. "Do Temporary Contracts Affect TFP? Evidence from Spanish Manufacturing Firms," IZA Discussion Papers 3832, Institute for the Study of Labor (IZA). [Downloadable!]
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