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- Title
EFFICIENCY AND PRODUCTION FRONTIERS IN THE AFTERMATH OF RECESSIONS: INTERNATIONAL EVIDENCE.
- Authors
Christopoulos, Dimitris; León-Ledesma, Miguel A.
- 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 period 1960–2000. Our results reveal that the average cumulative impact of recessions on productivity up to four years after their 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 to 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.
- Subjects
PRODUCTION (Economic theory); RECESSIONS; BUSINESS cycles; ECONOMIC policy; MONETARY policy; PERESTROIKA
- Publication
Macroeconomic Dynamics, 2014, Vol 18, Issue 6, p1326
- ISSN
1365-1005
- Publication type
Article
- DOI
10.1017/S1365100512000983