A Disaggregate Characterisation of Recessions

The Great Recession has inspired renewed interest in analyzing the behaviour of the economy during recession episodes, and how these temporary events can shape the productive structure of the economy for long periods. Most of the existing literature focuses on recessions at the aggregate level. We provide evidence on the behavior of a large set of developed and emerging markets at the disaggregate level around recession dates. We analyze sectoral value added (VA), employment, productivity, concentration, and structural change, and whether patterns arise in a systematic way. We unveil a set of regularities in the behaviour of these variables for both sets of countries and depending on the productivity level and the level of external financial dependence of industries. We distinguish financial from normal recessions, and look at the patterns of the above variables according to the productivity level and the level of external financial dependence of industries. This study leads to a rich set of results grouped in 14 stylized facts. Most importantly, we found that recessions tend to be more industry specific events in emerging markets and economy-wide phenomena in developed economies. Moreover, the amplitude of the cycle for VA and productivity growth is larger for emerging markets. The opposite is generally true for employment growth. Also, industries with high dependence on external finance generally face higher contractions in VA growth the year of the recession, and those contractions are higher in the case of financial than in the case of normal recessions. Finally, concentration of both VA and employment is higher among emerging markets, and especially when looking at employment shares.