Reallocation effects of recessions and financial crises: an industry-level analysis

Fabrizio Coricelli, Aikaterini Karadimitropoulou and Miguel Leon-Ledesma

The B.E. Journal of Macroeconomics, 2016, vol. 16, issue 2, 485-522

Abstract: We characterize the behavior of disaggregate manufacturing sectors for a large set of developed and emerging markets around recession dates. We uncover some relevant stylized facts. The dispersion in value added (VA) growth rates in developed economies is counter-cyclical, whereas for emerging countries it is pro-cyclical. Recoveries are more productivity-driven in developed countries as opposed to employment-driven for emerging markets. Around recession episodes sectoral-level misallocation of resources does not significantly change in developed economies, whereas it increases in emerging economies during financial crises. Therefore, there is no evidence that recessions improve the allocation of resources across industries.

Keywords: permanent productivity effects; recessions; sectoral restructuring (search for similar items in EconPapers)
JEL-codes: E32 O14 O47 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1515/bejm-2015-0082

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