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Author: Diego Restuccia Publisher: ISBN: Category : Capital Languages : en Pages : 35
Book Description
We formulate a version of the growth model in which production is carried out by heterogeneous plants and calibrate it to US data. In the context of this model we argue that differences in the allocation of resources across heterogeneous plants may be an important factor in accounting for cross-country differences in output per capita. In particular, we show that policies which create heterogeneity in the prices faced by individual producers can lead to sizeable decreases in output and measured TFP in the range of 30 to 50 percent. We show that these effects can result from policies that do not rely on aggregate capital accumulation or aggregate relative price differences. More generally, the model can be used to generate differences in capital accumulation, relative prices, and measured TFP.
Author: Diego Restuccia Publisher: ISBN: Category : Capital Languages : en Pages : 35
Book Description
We formulate a version of the growth model in which production is carried out by heterogeneous plants and calibrate it to US data. In the context of this model we argue that differences in the allocation of resources across heterogeneous plants may be an important factor in accounting for cross-country differences in output per capita. In particular, we show that policies which create heterogeneity in the prices faced by individual producers can lead to sizeable decreases in output and measured TFP in the range of 30 to 50 percent. We show that these effects can result from policies that do not rely on aggregate capital accumulation or aggregate relative price differences. More generally, the model can be used to generate differences in capital accumulation, relative prices, and measured TFP.
Author: José María da Rocha Álvarez Publisher: ISBN: Category : Asset allocation Languages : en Pages : 43
Book Description
What accounts for differences in output per capita and total factor productivity (TFP) across countries? Empirical evidence points to resource misallocation across heterogeneous production units as an important factor. We study resource misallocation in a model where establishment-level productivity is endogenous and responds to the same policy distortions that create misallocation. In this framework, policy distortions not only misallocate resources across a given set of productive units (static effect), but also create disincentives for productivity improvement (dynamic effect) thereby affecting the productivity distribution and further contributing to lower aggregate output and productivity. The dynamic effect is substantial quantitatively. Reducing the dispersion in revenue productivity in the model by 25 percentage points to the level of the U.S. benchmark implies an increase in aggregate output and TFP by a factor of 2.9-fold. Improved resource allocation accounts for 42 percent of the gain, whereas the change in the productivity distribution accounts for the remaining 58 percent.
Author: Ashantha Ranasinghe Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Plant-level innovation is introduced into an heterogeneous plant setting so that productivity dynamics are endogenous. When policy distortions are positively correlated with plant productivity, I argue that accounting for plant innovation is important for understanding TFP differences across countries. All plants reduce innovation thereby generating an endogenous right skew in the distribution over productivity which magnifies TFP losses. Quantitatively, the innovation channel is important: up to 50 percent of the losses in TFP are due to changes in innovation at the plant level. While idiosyncratic policy distortions have a profound effect on innovation and TFP, aggregate distortions have only mild effects. This is because idiosyncratic distortions have a non-proportional effect across plants which distorts the gains to improving productivity.
Author: Jose-Maria Da-Rocha Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
We consider policy distortions in a model where plants face idiosyncratic productivity shocks that evolve following a Brownian motion. Introducing idiosyncratic shocks into the model implies that plants have non-constant operating profits and as a result there is an endogenous exit margin and incumbent plants must decide in each period whether or not to remain in the industry. By using the forward Kolmogorov equation, we analytically characterize the Stationary Equilibrium. Our main contribution is to show that if a model is being calibrated/estimated without idiosyncratic shocks, where plants face constant productivity over time and the exit rate is exogenous to fit data generated from a model with shocks and endogenous entry, TFP distortions will be overestimated.
Author: Diego Restuccia Publisher: UN ISBN: Category : Business & Economics Languages : en Pages : 44
Book Description
Gross domestic product (GDP) per capita in Latin America is low -- about one fifth of that of the United States. In addition, in the last five decades, Latin America has been unsuccessful to catch-up in wealth to the United States level while other countries at similar or lower stages of development have been successful. The failure to achieve higher levels of relative income embodies so called the development problem of Latin America. According to the publication, the bulk of the difference in GDP per capita between Latin America and the United States is explained by low GDP per worker and, especially, low total factor productivity (TFP) in Latin America.
Author: Britos, Braulio Publisher: Intl Food Policy Res Inst ISBN: Category : Political Science Languages : en Pages : 44
Book Description
Farm size and land allocation are important factors in explaining lagging agricultural productivity in developing countries. This paper examines the effect of land market imperfections on land allocation across farmers and aggregate agricultural productivity. We develop a theoretical framework to model the optimal size distribution of farms and assess to what extent market imperfections can explain non-optimal land allocation and output in-efficiency. We measure these distortions for the case of Guatemala using agricultural census microdata. We find that due to land market imperfections aggregate output is 19% below its efficient level for both maize and beans and 31% below for coffee, which are three major crops produced nationwide. The regions with higher distortions show a higher dispersion in land prices and less active rental markets. We also find that the degree of land market distortions across locations co-variate with road accessibility and ethnicity and, in a lower extent, with education.
Author: Stephen L. Parente Publisher: MIT Press ISBN: 9780262264082 Category : Business & Economics Languages : en Pages : 188
Book Description
Why isn't the whole world as rich as the United States? Conventional views holds that differences in the share of output invested by countries account for this disparity. Not so, say Stephen Parente and Edward Prescott. In Barriers to Riches, Parente and Prescott argue that differences in Total Factor Productivity (TFP) explain this phenomenon. These differences exist because some countries erect barriers to the efficient use of readily available technology. The purpose of these barriers is to protect industry insiders with vested interests in current production processes from outside competition. Were this protection stopped, rapid TFP growth would follow in the poor countries, and the whole world would soon be rich. Barriers to Riches reflects a decade of research by the authors on this question. Like other books on the subject, it makes use of historical examples and industry studies to illuminate potential explanations for income differences. Unlike these other books, however, it uses aggregate data and general equilibrium models to evaluate the plausibility of alternative explanations. The result of this approach is the most complete and coherent treatment of the subject to date.
Author: Florian Misch Publisher: International Monetary Fund ISBN: 1484356551 Category : Business & Economics Languages : en Pages : 32
Book Description
This paper explores the role for specific structural distortions in explaining Mexico’s weak productivity growth through the resource misallocation channel. The paper makes two contributions. First, we validate the approach of measuring misallocation indirectly (Hsieh and Klenow, 2009) by illustrating a close correlation between misallocation and per capita incomes across Mexican states. Second, we exploit the large variation in resource misallocation within industries and across states together with unusually rich data at the firm, local, and industry level to shed light on its determinants. We identify several well-defined distortions that have a statistically and economically meaningful effect on productivity via resource misallocation.
Author: Gareth Anderson Publisher: International Monetary Fund ISBN: 1484343263 Category : Business & Economics Languages : en Pages : 46
Book Description
Productivity growth in Italy has been persistently anemic and has lagged that of the euro area over the period 1999-2015, while the indebtedness of its corporate sector has increased. Using the ORBIS firm-level database, this paper studies the long-term impact of persistent corporate-debt accumulation on the productivity growth of Italian firms and investigates whether total factor productivity growth varies with the level of corporate indebtedness. We employ a novel estimation technique proposed by Chudik, Mohaddes, Pesaran, and Raissi (2017) to account for dynamics, bi-directional feedback effects, cross-firm heterogeneity, and cross-sectional dependence arising from unobserved common factors (for example, oil price shocks, labor and product market frictions, and stance of global financial cycle). Filtering out the effects of unobserved common factors and controlling for firmspecific characteristics, we find significant negative effects of persistent corporate debt build-up on total factor productivity growth, and weak evidence of a threshold level of corporate debt, beyond which productivity growth drops off significantly. Our results have strong policy implications, for example the design of the tax system should discourage persistent corporate debt accumulation, and effective and timely frameworks to reduce corporate debt overhangs are essential.
Author: Jeremy Greenwood Publisher: DIANE Publishing ISBN: 1437933971 Category : Business & Economics Languages : en Pages : 46
Book Description
How important is financial development for economic development? A costly state verification model of financial intermediation is presented to address this question. The model is calibrated to match facts about the U.S. economy, such as intermediation spreads and the firm-size distribution for the years 1974 and 2004. It is then used to study the international data, using cross-country interest-rate spreads and per-capita GDP. The analysis suggests that a country like Uganda could increase its output by 140 to 180 percent if it could adopt the world's best practice in the financial sector. Still, this amounts to only 34 to 40 percent of the gap between Uganda's potential and actual output. Charts and tables.
Author: Diego Restuccia
Author: Diego Restuccia
Author: José María da Rocha Álvarez
Author: Ashantha Ranasinghe
Author: Jose-Maria Da-Rocha
Author: Diego Restuccia
Author: Britos, Braulio
Author: Stephen L. Parente
Author: Florian Misch
Author: Gareth Anderson
Author: Jeremy Greenwood