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An inquiry into manufacturing capacity in Italy after the double-dip recession

Libero Monteforte () and Giordano Zevi

No 302, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper investigate the effects of the prolonged double-dip recession on the productive capacity of the Italian manufacturing sector, employing three methods: a production function approach, a survey-based methodology and a statistical filtering of the industrial production series. We estimate that between 2007 and 2013 capacity contracted by 11�17%, depending on the method. We also conduct an exercise to quantify the loss with respect to a counterfactual evolution of capacity in a �no-crisis� scenario in which pre-2008 trends are extrapolated: in this case the loss is close to 20% for all methods. Finally, we identify the main sectors of activity responsible for the reduction in capacity in the baseline and counterfactual scenarios, and find that they don�t always coincide, reflecting uneven dynamics across sectors before and during the recession.

Keywords: productive capacity; manufacturing (search for similar items in EconPapers)
JEL-codes: E32 L16 L60 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_302_16

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