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EFFICIENCY AND PRODUCTION FRONTIERS IN THE AFTERMATH OF RECESSIONS: INTERNATIONAL EVIDENCE

Published online by Cambridge University Press:  12 June 2013

Dimitris Christopoulos  and
Miguel A. León-Ledesma
Dimitris Christopoulos
Affiliation:
Panteion University
Miguel A. León-Ledesma*
Affiliation:
University of Kent
*
Address correspondence to: Miguel León-Ledesma, School of Economics, Keynes College, University of Kent, Canterbury, Kent, CT27NP, UK; e-mail: m.a.leon-ledesma@kent.ac.uk.
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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.

Keywords

Growth and CyclesRecessionsTechnical EfficiencyTechnical Progress
Type
Articles
Information
Macroeconomic Dynamics , Volume 18 , Issue 6 , September 2014 , pp. 1326 - 1350
Copyright
Copyright © Cambridge University Press 2013 

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