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Capital goods, measured TFP and growth: The case of Spain

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  • Díaz, Antonia
  • Franjo, Luis

Abstract

The effect of investing in equipment and/or structures on TFP and long run growth is investigated here. We argue that economies can grow in spite of stagnant TFP if the investment rate is inefficiently high. We study the case of Spain where real GDP per worker grew at 2.74 percent annually and TFP was stagnant during 1996–2007. We show that low Spanish TFP is due to low ISTC and an inefficiently high investment in residential structures. We quantify the effect of the housing boom of the 2000s, the total cost of subsidies to residential structures in terms of TFP and income growth.

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  • Díaz, Antonia & Franjo, Luis, 2016. "Capital goods, measured TFP and growth: The case of Spain," European Economic Review, Elsevier, vol. 83(C), pages 19-39.
    • Handle: RePEc:eee:eecrev:v:83:y:2016:i:c:p:19-39
    DOI: 10.1016/j.euroecorev.2015.11.009
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    Cited by:

    1. Juan C. Conesa & Timothy J. Kehoe, 2017. "Productivity, taxes, and hours worked in Spain: 1970–2015," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(3), pages 201-223, August.
    2. José M. Pastor & Carlos Peraita & Francisco Pérez, 2016. "Estimating the long-term economic impacts of Spanish universities on the national economy," Papers in Regional Science, Wiley Blackwell, vol. 95(4), pages 673-692, November.
    3. Manuel García‐Santana & Enrique Moral‐Benito & Josep Pijoan‐Mas & Roberto Ramos, 2020. "Growing Like Spain: 1995–2007," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(1), pages 383-416, February.
    4. Enrique Moral-Benito, 2018. "Growing by learning: firm-level evidence on the size-productivity nexus," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(1), pages 65-90, March.
    5. Leandro Prados de la Escosura & Joan R. Rosés, 2021. "Accounting For Growth: Spain, 1850–2019," Journal of Economic Surveys, Wiley Blackwell, vol. 35(3), pages 804-832, July.
    6. Fu, Xiaolan & Buckley, Peter J. & Fu, Xiaoqing Maggie, 2020. "The Growth Impact of Chinese Direct Investment on Host Developing Countries," International Business Review, Elsevier, vol. 29(2).
    7. Juan Carlos Conesa & Pau S. Pujolas, 2019. "The Canadian productivity stagnation, 2002–2014," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(2), pages 561-583, May.
    8. Laurentiu Guinea & Luis A. Puch & Jesús Ruiz, 2019. "News-driven housing booms: Spain vs. Germany," Documentos de Trabajo del ICAE 2019-32, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    9. Obiols-Homs, F. & Sánchez-Marcos, V., 2018. "Education outcomes and the labor market," Labour Economics, Elsevier, vol. 54(C), pages 14-28.
    10. Andrés, Javier & Arce, Óscar & Thomas, Carlos, 2017. "Structural reforms in a debt overhang," Journal of Monetary Economics, Elsevier, vol. 88(C), pages 15-34.
    11. del Río, Fernando & Lores, Francisco-Xavier, 2023. "Accounting for Spanish economic development 1850-2019," MPRA Paper 116025, University Library of Munich, Germany.
    12. Nezih Guner, 2017. "Introduction to the special issue on the Survey of Adult Skills (PIAAC)," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(4), pages 311-314, November.
    13. Luigi Bonatti & Andrea Fracasso, 2017. "Addressing the Core-Periphery Imbalances in Europe: Resource Misallocation and Expansionary Fiscal Policies," EconPol Working Paper 6, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    14. del Río, Fernando & Lores, Francisco-Xavier, 2023. "Accounting for spanish economic development 1850–2019," Economic Modelling, Elsevier, vol. 121(C).
    15. Pilar Cuadrado & Enrique Moral-Benito & Irune Solera, 2020. "A sectoral anatomy of the spanish productivity puzzle," Occasional Papers 2006, Banco de España.
    16. Wang, Delu & Wang, Yadong & Jiang, Wuding & Shi, Xunpeng, 2023. "Has outward foreign direct investment alleviated industrial overcapacity in China? An empirical test of the upstream and downstream industrial links," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 250-263.

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    More about this item

    Keywords

    Spain; Total Factor Productivity; Growth accounting; Investment Specific Technical Change; Applied general equilibrium;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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