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

Stefano Fachin and Andrea Gavosto

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Labour Productvity; Productivity Slowdown; Italy; Panel Cointegration (search for similar items in EconPapers)
JEL-codes: C23 D24 (search for similar items in EconPapers)
Date: 2007-05-07
New Economics Papers: this item is included in nep-eff
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Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/12074/2/MPRA_paper_12074.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/26972/1/MPRA_paper_26972.pdf revised version (application/pdf)

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