We show that TFP reacts counter-cyclically to macroeconomic shocks, which we identify by imposing sign restrictions … output gap, are stronger when we allow TFP to depend on the state of the business cycle. …

Previous research shows that technical progress at the industry level, measured by sectoral TFP growth, is more … localized in continental European countries than in Anglo-Saxon coun-tries. We use EU KLEMS data sets to decompose sectoral TFP … technological progress is much more evenly distributed across sectors than TFP. …