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Reallocation effects of recessions and financial crises: an industry-level analysis

Author

Listed:
  • Coricelli Fabrizio

    (Department of Economics, Paris School of Economics, 75013, Paris, France and CEPR)

  • Karadimitropoulou Aikaterini E.

    (Department of Economics, University of East Anglia, Norwich, Norfolk NR4 7TJ, UK)

  • Leon-Ledesma Miguel A.

    (School of Economics and Macroeconomics, Growth and History Centre (MaGHiC), University of Kent, CT27NP, Canterbury, UK)

Abstract

We characterize the behavior of disaggregate manufacturing sectors for a large set of developed and emerging markets around recession dates. We uncover some relevant stylized facts. The dispersion in value added (VA) growth rates in developed economies is counter-cyclical, whereas for emerging countries it is pro-cyclical. Recoveries are more productivity-driven in developed countries as opposed to employment-driven for emerging markets. Around recession episodes sectoral-level misallocation of resources does not significantly change in developed economies, whereas it increases in emerging economies during financial crises. Therefore, there is no evidence that recessions improve the allocation of resources across industries.

Suggested Citation

  • Coricelli Fabrizio & Karadimitropoulou Aikaterini E. & Leon-Ledesma Miguel A., 2016. "Reallocation effects of recessions and financial crises: an industry-level analysis," The B.E. Journal of Macroeconomics, De Gruyter, vol. 16(2), pages 485-522, June.
    • Handle: RePEc:bpj:bejmac:v:16:y:2016:i:2:p:485-522:n:7
    DOI: 10.1515/bejm-2015-0082
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    References listed on IDEAS

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    More about this item

    Keywords

    permanent productivity effects; recessions; sectoral restructuring;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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