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Output collapses and productivity destruction

[journal article]

Blyde, Juan S.; Daude, Christian; Fernández-Arias, Eduardo

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-238949

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Abstract In this paper we analyze the long-run relationship between output collapses—defined as GDP falling substantially below trend—and total factor productivity (TFP). We use a panel of 76 developed and developing countries during the period 1960–2004 to identify episodes of output collapse and estimate counterfactual post-collapse TFP trends. Collapses are concentrated in developing countries, especially Africa and Latin America, and were particularly widespread in the 1980s in Latin America. Overall, output collapses are systematically associated with long-lasting declines in TFP. We explore the conditions under which collapses are least or most damaging, as well as the type of shocks that make collapses more likely or severe. Furthermore, we provide a quantification of the associated welfare loss with output collapses.
Classification Political Economy
Free Keywords Growth; Recessions; Productivity; Recovery
Document language English
Publication Year 2010
Page/Pages p. 359-387
Journal Review of World Economics, 146 (2010) 2
DOI http://dx.doi.org/10.1007/s10290-010-0051-0
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)