Technical change, sectoral dislocation and barriers to labor mobility: Factors behind the great recession

Enzo Valentini, Marco Arlotti, Fabiano Compagnucci, Andrea Gentili, Fabrizio Muratore and Mauro Gallegati

Journal of Economic Dynamics and Control, 2017, vol. 81, issue C, 187-215

Abstract: The global financial and economic crisis, which began in late 2007 (Great Recession) is the worst international crisis since 1929 (Great Depression), and still affects many countries. This paper attempts to determine if the theory of “extended crises” presented by Delli Gatti et al. (2012) is consistent with empirical evidence. The analysis is carried out using two approaches. The first part of the paper is purely descriptive and is dedicated to a comparison between structural differences and different patterns of development in six countries: France, Germany, Italy, Spain, UK and US. Using data on the major world economies (KLEMS and STAN) since 1970, we show that the fundamentals behind the “extended crisis theory” apply to these economies. We focus particularly on Italy, Germany and the US. Among large economies, Italy is one of the most affected and still not recovering, even though the Italian financial sector appeared to have been less exposed to the 2008 shock than other countries. The crisis in Italy could be directly connected to the failure of the Italian economy to move to an economic system based on more skill-intensive production, in particular in the service sector (as in the US). The US financial sector was extremely exposed to the 2008 sub-prime crisis but US economy recovered much faster than in many European countries. Germany is the leading European economy, generally considered in European public debate as the example to be followed. In the last part of the paper the analysis is broadened, involving more countries in a panel analysis approach: different specifications of panel probit/logit models are presented, in a first attempt to investigate the roles of both structural features and financial shock in explaining the extent of the crisis in different countries.

Keywords: Extended crises; Structural change; Productivity; Knowledge economy (search for similar items in EconPapers)
JEL-codes: E24 J31 N30 O14 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165188917301021
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:81:y:2017:i:c:p:187-215

DOI: 10.1016/j.jedc.2017.05.005

Access Statistics for this article

Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

More articles in Journal of Economic Dynamics and Control from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).