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Efficiency and production frontiers in the aftermath of recessions: international evidence

Christopoulos, Dimitris K, Leon-Ledesma, Miguel A. (2014) Efficiency and production frontiers in the aftermath of recessions: international evidence. Macroeconomic Dynamics, 18 (6). pp. 1326-1350. ISSN 1365-1005. (doi:10.1017/S1365100512000983)

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http://dx.doi.org/10.1017/S1365100512000983

Abstract

The relationship between recessions and productivity growth has been the focus of an important body of theoretical and empirical research in the last two decades. We contribute to this literature by presenting new evidence on the evolution of productivity in the aftermath of recessions. Our method allows us to distinguish between frontier and (in-)efficiency effects of recessions. We present international evidence for a panel of 70 countries for the 1960-2000 period. Our results reveal that the average cumulative impact of recessions on productivity up to four years after its end is negative and significant. This, however, results from a mixture of mechanisms. The level of frontier production increases, but the rate of technical progress decreases, leading to a fall in frontier production. Efficiency also falls, lending support for the idea that recessions tend to reduce, rather than increase, economic restructuring. Long and deep recessions are also shown to have distinctive impacts on productivity.

Item Type: Article
DOI/Identification number: 10.1017/S1365100512000983
Uncontrolled keywords: growth and cycles, recessions, technical efficiency, technical progress.
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Miguel Leon-Ledesma
Date Deposited: 03 May 2015 15:38 UTC
Last Modified: 06 Feb 2020 14:06 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/48175 (The current URI for this page, for reference purposes)
Leon-Ledesma, Miguel A.: https://orcid.org/0000-0002-3558-2990
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