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The decline in Italian productivity: a study in estimation of long-Run trends in Total Factor Productivity with panel cointegration methods

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  • Fachin, Stefano
  • Gavosto, Andrea

Abstract

The aim of this paper is (i) to propose a method for obtaining estimates of long-run total factor productivity (TFP) trends free from the restrictive assumptions needed by traditional growth accounting, requiring only data on inputs and output flows, and able to deliver estimates of long-run TFP trends; (ii) to apply it to the Italian manufacturing industries over the period 1980-2001, so to shed some light on the severe productivity slowdown of the last decade. The approach proposed relies on recent developments in the analysis of non-stationary, cross-correlated panels. The empirical application, consistently with growth accounting, supports the view that the decline in Italian labour productivity has been mostly due to a widespread fall in TFP growth. A simple regression points as main causes to the completion of a factor reallocation process among industries and inadequate R&D investment.

Suggested Citation

  • Fachin, Stefano & Gavosto, Andrea, 2007. "The decline in Italian productivity: a study in estimation of long-Run trends in Total Factor Productivity with panel cointegration methods," MPRA Paper 3112, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:3112
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    References listed on IDEAS

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    Cited by:

    1. Alessandro Sterlacchini & Francesco Venturini, 2013. "Boosting Manufacturing Productivity Through R&D: International Comparisons with Special Focus on Italy," Journal of Industry, Competition and Trade, Springer, vol. 13(2), pages 187-208, June.

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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