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See detailDiversification de la structure de production : Analyse en panel des branches industrielles luxembourgeoises
Bourgain, Arnaud UL; Guarda, Paolo; Pieretti, Patrice UL

in Cahiers Economiques de Bruxelles (2000), (167), 275-298

A weakly diversified macro-economic structure is characterised by an excessive concentration of production in certain dominant branches. It is hard to evaluate the impact of policies aimed at this problem ... [more ▼]

A weakly diversified macro-economic structure is characterised by an excessive concentration of production in certain dominant branches. It is hard to evaluate the impact of policies aimed at this problem, because an increase in diversification can be more apparent than real. Business cycle effects can temporarily diminish the part held by dominant branches, giving the impression of structural change. In this article, growth by branch is separated into trend and cycle components using an “error-components” approach. On the one hand, the trend growth components can reveal changes in the macro-economic structure: a true increase in diversification requires lower trend growth rates in the dominant branches. On the other hand, cyclical growth components help to assess the nature of diversification itself: if cyclical shocks are strongly correlated across sectors, diversification will bring few advantages. An application to value added growth in Luxembourg’s industrial branches shows how increasing diversification decreased volatility of the sector as a whole. [less ▲]

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