Catching up in total factor productivity through the business cycle: Evidence from Spanish manufacturing firms

Alvaro Escribano and Rodolfo Stucchi

No 2011-10, Working Papers from Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales

Abstract: After facing more than a decade of price stability and economic growth, Spain is experiencing now one of the most significant slowdowns in economic activity across EU economies. There is a general consensus the severity of this slowdown is due to the low level and low rates of growth experienced by total factor productivity (TFP) during more than a decade. Using firm-level data over the period 1991-2005 we study the effect of recessions on the productivity growth of firms with different level of productivity (i.e., technological leaders and technological followers) and we find that firms tend to converge in recessions. In expansions, on the other hand, we find higher persistence in terms of productivity and no convergence. These findings are consistent with the predictions of technological diffusion models and the fact that firm’s innovation is procyclical. We also find that human capital and innovation are key factors that could enhance the productivity of Spanish manufacturing firms.

Keywords: productivity catching up; technology diffusion; pro-cyclical innovation; technological leaders; business cycle (search for similar items in EconPapers)
JEL-codes: C23 C52 D24 L16 L60 (search for similar items in EconPapers)
Date: 2011-06-28
New Economics Papers: this item is included in nep-bec, nep-eff and nep-sbm
Note: This paper is included in the IMDEA Social Sciences Working Paper Series through the Bank of Spain Excellence Programme
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Catching up in total factor productivity through the business cycle: evidence from Spanish manufacturing surveys (2008)
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