The Great Recession and its recovery: a growth accounting analysis for selected OECD countries

Abstract

The Great Recession is the name given to the period of economic crisis that began at the end of 2007 in most countries, and its severity and duration was very different. In this paper we analyze that period for some of the OECD countries: Italy, Portugal, Spain, Sweden, Norway and Denmark. The selected OECD countries can be classified into two groups: Mediterranean countries (Italy, Portugal and Spain) and Scandinavian countries (Sweden, Norway and Denmark). We focus on the study of the growth rate of output per working-age population and on the contribution of factors of production and total factor productivity to this growth rate. The methodology used is the growth accounting analysis applied to the above mentioned countries. We study those variables that contribute most to the fall in Gross Domestic Product (GDP) per working age population and those that contribute most to its recovery for each country. Furthermore, the results obtained not only allow us to perform an individual analysis for each country, but also to identify similarities and differences among the countries chosen. The main conclusions of the work can be summarized as follows: while in the Mediterranean countries the recovery has been due to the labor factor, in the Scandivavian countries it is mostly explained by total factor productivity.