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Catching up in total factor productivity through the business cycle: Evidence from Spanish manufacturing firms

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  • Álvaro Escribano

    ()
    (Universidad Carlos III de Madrid)

  • Rodolfo Stucchi

    ()
    (Inter-American Development Bank)

Abstract

After facing more than a decade of price stability and economic growth, Spain is experiencing now one of the most significant slowdowns in economic activity across EU economies. There is a general consensus the severity of this slowdown is due to the low level and low rates of growth experienced by total factor productivity (TFP) during more than a decade. Using firm-level data over the period 1991-2005 we study the effect of recessions on the productivity growth of firms with different level of productivity (i.e., technological leaders and technological followers) and we find that firms tend to converge in recessions. In expansions, on the other hand, we find higher persistence in terms of productivity and no convergence. These findings are consistent with the predictions of technological diffusion models and the fact that firm’s innovation is procyclical. We also find that human capital and innovation are key factors that could enhance the productivity of Spanish manufacturing firms.

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Paper provided by Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2011-10.

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Date of creation: 28 Jun 2011
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Handle: RePEc:imd:wpaper:wp2011-10

Note: This paper is included in the IMDEA Social Sciences Working Paper Series through the Bank of Spain Excellence Programme
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Keywords: productivity catching up; technology diffusion; pro-cyclical innovation; technological leaders; business cycle;

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Citations

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Cited by:
  1. Dolado, Juan J. & Stucchi, Rodolfo, 2008. "Do Temporary Contracts Affect TFP? Evidence from Spanish Manufacturing Firms," IZA Discussion Papers 3832, Institute for the Study of Labor (IZA).
  2. Daniela, Maggioni, 2011. "Productivity dispersion and its determinants: the role of import penetration," MPRA Paper 37154, University Library of Munich, Germany.
  3. Juan Jóse Dolado & Salvador Ortigueira & Rodolfo Stucchi, 2011. "Does dual employment protection affect TFP? Evidence from Spanish manufacturing firms," Economics Working Papers we1137, Universidad Carlos III, Departamento de Economía.
  4. 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.
  5. 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.
  6. Alessio, Moro & Rodolfo, Stucchi, 2011. "Heterogeneous Productivity Shocks, Elasticity of Substitution and Aggregate Fluctuations," MPRA Paper 29032, University Library of Munich, Germany.

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