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Productivity Dynamics in the Great Stagnation: Evidence from British businesses

  • Rebecca Riley

    ()

    (National Institute of Economic and Social Research (NIESR)
    Centre for Macroeconomics (CFM))

  • Chiara Rosazza Bondibene

    ()

    (National Institute of Economic and Social Research (NIESR)
    Centre for Macroeconomics (CFM))

  • Garry Young

    ()

    (Bank of England
    Centre for Macroeconomics (CFM))

We investigate labor productivity dynamics amongst British businesses in the wake of the credit crisis of 2007/8. The external restructuring of firms (i.e. changes in market share, firm entry and exit) contributed to a fall in productivity growth relative to trend amongst small businesses in bank dependent industries, consistent with the idea that an adverse credit supply shock caused inefficiencies in resource allocation across firms. But, the major part of the decline in UK productivity growth following the credit crisis was accounted for by a widespread productivity shock within firms, pointing to the importance of other factors in explaining the Great Stagnation.

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File URL: http://www.centreformacroeconomics.ac.uk/Discussion-Papers/2014/CFMDP2014-07-Paper.pdf
File Function: Revised version, 2014
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Paper provided by Centre for Macroeconomics (CFM) in its series Discussion Papers with number 1407.

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Length: 46 pages
Date of creation: Aug 2013
Date of revision: Apr 2014
Handle: RePEc:cfm:wpaper:1407
Contact details of provider: Web page: http://www.centreformacroeconomics.ac.uk/

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