The Evolution of Spanish Total Factor Productivity Since the Global Financial Crisis

33 Pages Posted: 26 Oct 2018

See all articles by Enrique Moral-Benito

Enrique Moral-Benito

Banco de España; Universidad Carlos III de Madrid

Chenxu Fu

Centre for Monetary and Financial Studies (CEMFI)

Date Written: October 25, 2018

Abstract

Total factor productivity (TFP) is considered the key determinant of long-term and sustainable economic growth. The dismal evolution of TFP characterized the Spanish economy since the foundation of the Eurozone until the outbreak of the Global Financial Crisis [see García- Santana et al. (2016)]. This article provides an anatomy of the recent evolution of Spanish TFP using both aggregate- and micro-level data available until 2016. Three conclusions emerge from our findings: i) while TFP growth remained subdued during the crisis, a TFP revival is taking place over the last years; ii) this pattern is mostly driven by the rise and fall of the capital-to-labor ratio (capital deepening) while the role of labor productivity is more muted, and iii) an across-the-board increase in firms’ capital-to-labor ratios accounts for most of the TFP decline during the first years of the crisis, while the subsequent TFP revival is explained by the reallocation of resources towards firms with low capital deepening.

Keywords: Spain, firm level data, TFP, misallocation.

JEL Classification: D24, O11, O47, E44, G21, L25.

Suggested Citation

Moral-Benito, Enrique and Fu, Chenxu, The Evolution of Spanish Total Factor Productivity Since the Global Financial Crisis (October 25, 2018). Banco de Espana Ocassional Paper 1808. Available at SSRN: https://ssrn.com/abstract=3272737 or http://dx.doi.org/10.2139/ssrn.3272737

Enrique Moral-Benito (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

Chenxu Fu

Centre for Monetary and Financial Studies (CEMFI) ( email )

Casado del Alisal 5
28014 Madrid
Spain

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