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

Fabrizio Coricelli, Aikaterini Karadimitropoulou, Miguel Leon-Ledesma

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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.
Original languageEnglish
Pages (from-to)485–522
Number of pages38
JournalThe B.E. Journal of Macroeconomics
Issue number2
Early online date8 Mar 2016
Publication statusPublished - Jun 2016


  • permanent productivity effects
  • recessions
  • sectoral restructuring

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