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The UK's great demand and supply recession

Nick Jacob and Giordano Mion ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We revisit UK's poor productivity performance since the Great Recession by means of both a suitable theoretical framework and firm-level prices and quantities data for detailed products allowing us to both measure demand, and its changes over time, and distinguish between quantity total factor productivity (TFP-Q), i.e., the capacity to turn inputs into more physical output (number of shirts, liters of beer), and what we call revenue total factor productivity (TFP-R), i.e., productivity calculated using revenue (or value-added) as a measure of output and so the capacity to turn inputs into more revenue. This in turn allows us to measure how changes in TFP-Q, demand and markups ultimately affected revenue TFP, as well as labour productivity, over the Great Recession. Our findings suggest that the poor UK firms' productivity performance post-recession is due to both a weakening of demand and a decreasing TFP-Q pushing down sales, markups, revenue TFP and labour productivity.

Keywords: Total factor productivity (TFP); revenue TFP; prices; demand; great recession; United Kingdom (search for similar items in EconPapers)
JEL-codes: D24 E01 L11 O47 O52 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-eff and nep-mac
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Related works:
Working Paper: The UK's Great Demand and Supply Recession (2020) Downloads
Working Paper: The UK's Great Demand and Supply Recession (2020) Downloads
Working Paper: The UK's great demand and supply recession (2020) Downloads
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