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Author: Nasir Hossein Dad Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
What accounts for the large gaps in aggregate productivity across countries? I study the impact of equity frictions and policy distortions on aggregate productivity, investments in productivity and average firm size. I document that economies with deeper equity markets have higher productivity, invest more in productivity, have larger firms on average and exhibit lower elasticity of productivity to distortions. I build and calibrate a general equilibrium model with endogenous entry and productivity investments and find that equity frictions and policy distortions can account for up to 50 percent of TFP losses. I show that the equity frictions amplify the productivity effect of distortionary policies by affecting productivity investment channel, dampening aggregate productivity and economic growth. I decompose the impact of policy distortions through a static resource misallocation channel and dynamic implications through investments in productivity. I find that the dynamic effect is 3-fold larger than the impact through the resource misallocation in the US (benchmark) economy. I re-calibrate the quantitative model to Mexico and find that the dynamic effect is 5-fold larger than the impact through resource misallocation. I highlight a key interaction between equity frictions, policy distortions and investments in productivity. I show that policy distortions have a larger impact in economies with less developed equity markets and bulk of the effects are accounted for through distortion in productivity investments.
Author: Nasir Hossein Dad Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
What accounts for the large gaps in aggregate productivity across countries? I study the impact of equity frictions and policy distortions on aggregate productivity, investments in productivity and average firm size. I document that economies with deeper equity markets have higher productivity, invest more in productivity, have larger firms on average and exhibit lower elasticity of productivity to distortions. I build and calibrate a general equilibrium model with endogenous entry and productivity investments and find that equity frictions and policy distortions can account for up to 50 percent of TFP losses. I show that the equity frictions amplify the productivity effect of distortionary policies by affecting productivity investment channel, dampening aggregate productivity and economic growth. I decompose the impact of policy distortions through a static resource misallocation channel and dynamic implications through investments in productivity. I find that the dynamic effect is 3-fold larger than the impact through the resource misallocation in the US (benchmark) economy. I re-calibrate the quantitative model to Mexico and find that the dynamic effect is 5-fold larger than the impact through resource misallocation. I highlight a key interaction between equity frictions, policy distortions and investments in productivity. I show that policy distortions have a larger impact in economies with less developed equity markets and bulk of the effects are accounted for through distortion in productivity investments.
Author: Joel M. David Publisher: ISBN: Category : Asset allocation Languages : en Pages : 51
Book Description
We study a model of investment in which both technological and informational frictions as well as institutional/policy distortions lead to capital misallocation, i.e., static marginal products are not equalized. We devise an empirical strategy to disentangle these forces using readily observable moments in firm-level data. Applying this methodology to manufacturing firms in China reveals that adjustment costs and uncertainty have significant aggregate consequences but account for only a modest share of the observed dispersion in the marginal product of capital. A substantial fraction of misallocation stems from firm-specific distortions, both productivity/size-dependent as well as permanent. For large US firms, adjustment costs are relatively more salient, though permanent firm-level factors remain important. These results are robust to the presence of liquidity/financial constraints.
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: 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: Ms. Emilia M Jurzyk Publisher: International Monetary Fund ISBN: 1513571923 Category : Business & Economics Languages : en Pages : 45
Book Description
We document that publicly listed Chinese state-owned enterprises (SOEs) are less productive and profitable than publicly listed firms in which the state has no ownership stake. In particular, Chinese listed SOEs are more capital intensive and have a lower average product of capital than non-SOEs. These productivity differences increased between 2002 and 2009, and remain sizeable in 2019. Using a heterogeneous firm model of resource misallocation, we find that there are large potential productivity gains from reforms which could equalize the marginal products of listed SOEs and listed non-SOEs.
Author: Daniel A Dias Publisher: International Monetary Fund ISBN: 1475554060 Category : Business & Economics Languages : en Pages : 50
Book Description
Recent empirical studies document that the level of resource misallocation in the service sector is significantly higher than in the manufacturing sector. We quantify the importance of this difference and study its sources. Conservative estimates for Portugal (2008) show that closing this gap, by reducing misallocation in the service sector to manufacturing levels, would boost aggregate gross output by around 12 percent and aggregate value added by around 31 percent. Differences in the effect and size of productivity shocks explain most of the gap in misallocation between manufacturing and services, while the remainder is explained by differences in firm productivity and age distribution. We interpret these results as stemming mainly from higher output price rigidity, greater labor adjustment costs and more informality in the service sector.
Author: Francesco Manaresi Publisher: International Monetary Fund ISBN: 1498315917 Category : Business & Economics Languages : en Pages : 75
Book Description
We study the impact of bank credit on firm productivity. We exploit a matched firm-bank database covering all the credit relationships of Italian corporations, together with a natural experiment, to measure idiosyncratic supply-side shocks to credit availability and to estimate a production model augmented with financial frictions. We find that a contraction in credit supply causes a reduction of firm TFP growth and also harms IT-adoption, innovation, exporting, and adoption of superior management practices, while a credit expansion has limited impact. Quantitatively, the credit contraction between 2007 and 2009 accounts for about a quarter of observed the decline in TFP.
Author: Vojislav Maksimovic Publisher: World Bank Publications ISBN: Category : Access to Finance Languages : en Pages : 77
Book Description
Abstract: China is often mentioned as a counterexample to the findings in the finance and growth literature since, despite the weaknesses in its banking system, it is one of the fastest growing economies in the world. The fast growth of Chinese private sector firms is taken as evidence that it is alternative financing and governance mechanisms that support China's growth. This paper takes a closer look at firm financing patterns and growth using a database of 2,400 Chinese firms. The authors find that a relatively small percentage of firms in the sample utilize formal bank finance with a much greater reliance on informal sources. However, the results suggest that despite its weaknesses, financing from the formal financial system is associated with faster firm growth, whereas fund raising from alternative channels is not. Using a selection model, the authors find no evidence that these results arise because of the selection of firms that have access to the formal financial system. Although firms report bank corruption, there is no evidence that it significantly affects the allocation of credit or the performance of firms that receive the credit. The findings suggest that the role of reputation and relationship based financing and governance mechanisms in financing the fastest growing firms in China is likely to be overestimated.
Author: Diego Comin Publisher: DIANE Publishing ISBN: 1437935605 Category : Technology & Engineering Languages : en Pages : 51
Book Description
In the aftermath of World War II, the world's economies exhibited very different rates of economic recovery. The authors provide evidence that those countries that caught up the most with the U.S. in the postwar period are those that also saw an acceleration in the speed of adoption of new technologies. This acceleration is correlated with the incidence of U.S. economic aid and technical assistance in the same period. The authors interpret this as supportive of the interpretation that technology transfers from the U.S. to Western European countries and Japan were an important factor in driving growth in these recipient countries during the postwar decades. Charts and tables.
Author: Nasir Hossein Dad
Author: Nasir Hossein Dad
Author: Joel M. David
Author: Joel M. David
Author: Jeremy Greenwood
Author: Stephen L. Parente
Author: Ms. Emilia M Jurzyk
Author: Daniel A Dias
Author: Francesco Manaresi
Author: Vojislav Maksimovic
Author: Diego Comin