RT Journal Article
T1 Accounting for the role of investment frictions in recessions
A1 Río Iglesias, Fernando del
A1 Lores Insua, Francisco Xavier
K1 Business Cycle Accounting
K1 Capital-Efficiency Wedge
K1 Labour Efficiency Wedge
K1 Labour Wedge
K1 Investment Wedge
K1 Resource Constraint Wedge
K1 Productivity
K1 Labour Share
K1 Hours Worked
K1 Great Recession
AB Our business cycle accounting exercise reveals that both capital and investment efficiency declines played a prominent role in accounting for the output downturn during the US Great Recession. The evidence indicates that an increase in firms' investment costs may have played a substantial role during the US Great Recession, consistent with business cycle models in which firms face financial frictions. The negligible role played by the total factor productivity decline in accounting for the output downturn during the US Great Recession found by previous works can be explained by the movement in opposite directions of both labour and capital efficiency. However, we find that labour efficiency falling was the main force driving output downturn in the 1982 recession and the euro area Great Recession
PB Wiley
SN 0013-0427
YR 2023
FD 2023
LK http://hdl.handle.net/10347/31111
UL http://hdl.handle.net/10347/31111
LA eng
NO Río, F del, Lores, F-X. Accounting for the role of investment frictions in recessions. Economica. 2023; 1- 30. doi: 10.1111/ecca.12485
NO We would like to thank the Editor and two anonymous reviewers for their insightful and constructive comments and suggestions that helped us to improve the paper significantly. All errors are our own.Financial support from the Xunta de Galicia (GPC) GI-2060 and Spanish Ministry of Economy and Competitiveness PID2020-118119GB-I00 is gratefully acknowledged
DS Minerva
RD 23 abr 2026