Output Collapses and Productivity Destruction

Juan Blyde, Christian Daude and Eduardo Fernandez-Arias

No 4610, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: This paper analyzes the long-run relationship between output collapses—defined defined as GDP falling substantially below trend—and total factor productivity (TFP), using a panel of 71 developed and developing countries during the period 1960-2003 to identify episodes of output collapse and estimate counterfactual post-collapse TFP trends. Collapses are concentrated in developing countries, especially African and Latin American, and were particularly widespread in the 1980s in Latin America. Overall, output collapses are systematically associated with long-lasting declines in TFP. The paper explores the conditions under which collapses are least or most damaging, as well as the type of shocks that make collapses more likely or severe, and additionally quantifies the welfare cost associated with output collapses.

Keywords: Growth; recessions; productivity; recovery (search for similar items in EconPapers)
JEL-codes: F43 O40 (search for similar items in EconPapers)
Date: 2009-01
New Economics Papers: this item is included in nep-dev, nep-lam and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Output collapses and productivity destruction (2010)
Working Paper: Output Collapses and Productivity Destruction (2009)
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