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Catching up in total factor productivity through the business cycle : evidence from Spanish manufacturing surveys

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Abstract
Spain has recently experienced more than a decade of price stability and economic growth however now is showing one of the most significant slowdowns in economic activity of the EU economies. There is a general consensus that this slowdown in economic activity is particularly important in Spain due to the low level and low rates of growth experienced by total factor productivity (TFP) during more than a decade. Among the key policy elements that could enhance TFP of manufacturing firms in Spain we find those related to human capital, foreign direct investment, and process innovations. We evaluate the effect of recessions on the productivity growth of firms with different level of productivity. We present evidence on the dynamic of firm’s TFP through the business cycle allowing for a differentiated behavior for technological leaders and followers. We observe lower persistence and faster convergence in TFP during recessions and, higher persistence and non convergence in TFP during expansions. These empirical findings are consistent with the predictions obtained from the technological diffusion literature and from the fact that firm’s innovation is pro-cyclical. These conclusions are obtained from a microeconometric analysis of surveys of Spanish manufacturing firms (ESEE) from 1991 to year 2005.

Suggested Citation

  • Stucchi, Rodolfo, 2008. "Catching up in total factor productivity through the business cycle : evidence from Spanish manufacturing surveys," UC3M Working papers. Economics we085125, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:we085125
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    Cited by:

    1. Dolado, Juan J & Stucchi, Rodolfo, 2008. "Do Temporary Contracts Affect TFP? Evidence from Spanish Manufacturing Firms," CEPR Discussion Papers 7055, C.E.P.R. Discussion Papers.
    2. Juan J. Dolado & Salvador Ortigueira & Rodolfo Stucchi, 2016. "Does dual employment protection affect TFP? Evidence from Spanish manufacturing firms," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(4), pages 421-459, November.
    3. Moro, Alessio & Stucchi, Rodolfo, 2015. "Heterogeneous productivity shocks, elasticity of substitution and aggregate fluctuations," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 45-53.
    4. Daniela Maggioni, 2013. "Productivity Dispersion and its Determinants: The Role of Import Penetration," Journal of Industry, Competition and Trade, Springer, vol. 13(4), pages 537-561, December.
    5. Ball, V. Eldon & Ulloa, Camilo A., 2011. "Agricultural productivity in the United States: catching-up and the business cycle," UC3M Working papers. Economics we1116, Universidad Carlos III de Madrid. Departamento de Economía.
    6. Monica Correa Lopez & Rafael Domenech, 2014. "Does anti-competitive service sector regulation harm exporters? Evidence from manufacturing firms in Spain," Working Papers 1413, BBVA Bank, Economic Research Department.
    7. Dolores Añón Higón & Miguel Manjón & Juan A. Máñez & Juan A. Sanchis-Llopis, 2014. "Does R&D Protect Smes From The Hardness Of The Cycle? Evidence From Spanish Smes (1990-2009)," Working Papers 1411, Department of Applied Economics II, Universidad de Valencia.
    8. V. Ball & Carlos San-Juan-Mesonada & Camilo Ulloa, 2014. "State productivity growth in agriculture: catching-up and the business cycle," Journal of Productivity Analysis, Springer, vol. 42(3), pages 327-338, December.
    9. Álvaro Escribano & Rodolfo Stucchi, 2014. "Does recession drive convergence in firms’ productivity? Evidence from Spanish manufacturing firms," Journal of Productivity Analysis, Springer, vol. 41(3), pages 339-349, June.
    10. Ball, V. Eldon & San Juan, Carlos & Ulloa, Camilo, 2012. "State Productivity Growth: Catching Up and the Business Cycle," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123334, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    Productivity catching up;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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