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Heterogeneous Fall in Productive Capacity in Italian Industry during the 2008-13 Double-Dip Recession

Andrea Locatelli (), Libero Monteforte () and Giordano Zevi

No 303, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Between 2008 and 2013 productive capacity was considerably downsized in the Italian manufacturing sector. This paper analyses the micro-data collected for the Bank of Italy surveys to identify the main drivers of the reduction in the whole 2008-13 period and in four sub-periods (pre-crisis 2001-07, first phase of the crisis 2008-09, recovery 2010-11, and second crisis 2012-13). Our main findings are that i) losses of productive capacity varied widely across manufacturing sub-sectors with differences in pre-crisis trends tending to persist in a few sub-sectors during the double-dip recession; ii) large firms were more successful in avoiding major capacity losses, especially in the first phase of the crisis; iii) the share of sales on foreign markets was negatively correlated with performance in 2008-09, but the correlation turned positive in 2012-13; iv) among the Italian macro-regions, the Centre weathered the long recession better; v) subsidiaries underperformed firms not belonging to any group; and vi) the negative effects on productive capacity of credit constraints, which discouraged investments, were felt by Italian firms particularly in 2012-13.

Keywords: productive capacity; manufacturing; microdata (search for similar items in EconPapers)
JEL-codes: E32 L16 L60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-mac
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