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Structural transformation in the Spanish economy

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  • Omar Rachedi

    (Banco de España)

Abstract

This paper studies how the variation in sectoral productivities shapes the sectoral composition of the Spanish economy from 1980 to 2015. I first document an asymmetric behavior of sectoral productivities: the productivity of services declines over time, whereas the productivity of manufacturing increases until the 1990s, before slowing down. I feed the path of sectoral productivities observed in the data into a model of structural transformation with two sectors (services and manufacturing) which are connected by an Input-Output matrix. The model reproduces the variation of the gross output services share of the Spanish economy between 1980 and 2015. The model implies that – even absent changes in the trends of sectoral productivities – the annual growth rate of GDP between 2015 and 2050 shrinks by 0.6 percentage points with respect to the average growth rate between 1980 and 2015. Hence, annual GDP growth would decline from 2.3% to 1.7%. If sectoral productivities were to equal the levels observed in the Euro Area between 1980 and 2015, the average growth rate of Spanish GDP between 2015 and 2050 would be 2.1%.

Suggested Citation

  • Omar Rachedi, 2020. "Structural transformation in the Spanish economy," Occasional Papers 2003, Banco de España.
    • Handle: RePEc:bde:opaper:2003
    as

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    References listed on IDEAS

    as
    1. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
    2. Gita Gopinath & Şebnem Kalemli-Özcan & Loukas Karabarbounis & Carolina Villegas-Sanchez, 2017. "Capital Allocation and Productivity in South Europe," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1915-1967.
    3. Alessio Moro & Omar Rachedi, 2022. "The Changing Structure Of Government Consumption Spending," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(3), pages 1293-1323, August.
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    11. Pasten, Ernesto & Schoenle, Raphael & Weber, Michael, 2020. "The propagation of monetary policy shocks in a heterogeneous production economy," Journal of Monetary Economics, Elsevier, vol. 116(C), pages 1-22.
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    13. Pilar Cuadrado & Enrique Moral-Benito, 2016. "Potential growth of the spanish economy," Occasional Papers 1603, Banco de España.
    14. Alessandro Galesi & Omar Rachedi, 2019. "Services Deepening and the Transmission of Monetary Policy," Journal of the European Economic Association, European Economic Association, vol. 17(4), pages 1261-1293.
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    17. Hafedh BOUAKEZ & Omar RACHEDI & Santoro EMILIANO, 2018. "Sectoral Heterogeneity, Production Networks, and the Effects of Government Spending," Cahiers de recherche 17-2018, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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    More about this item

    Keywords

    sectoral analysis; Input-Output matrix; Spanish economy;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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