Search Results
Journal Article
TFP, Capital Deepening, and Gains from Trade
Using a dynamic, multicountry model with capital accumulation, we compute the exact transition paths for 93 countries following a permanent, uniform, unanticipated trade liberalization and calculate the resulting welfare gains from trade. We find that while the dynamic gains are different across countries, consumption transition paths look similar except for scale. In addition, dynamic gains accrue gradually and are about 60 percent of steady-state gains for everycountry. Finally, the contribution of capital accumulation to dynamic gains is four times that of total factor productivity.
Report
The Great Recession, entrepreneurship, and productivity performance
In recent years, it is argued, the level of entrepreneurial activity in the United States has declined, causing concern because of its potential macroeconomic implications. In particular, it is feared that a lower rate of firm creation may be associated with lower productivity growth and, hence, lower economic growth in the coming years. This paper studies the issue, focusing on the dynamics of entrepreneurship and productivity around the time of the Great Recession. The author looks first at the recent evolution of alternative measures of entrepreneurship and of productivity, and then ...
Working Paper
Finance and Productivity Growth: Firm-level Evidence
Using data on a broad set of European firms, we find a strong positive relationship between the use of external financing and future productivity (TFP) growth within firms. This relationship is robust to various measures of financing and productivity, and strengthens as financing costs increase. We provide evidence against a reverse-causality explanation by showing that this relationship arises from the component of TFP that is outside the information set of the firm. These findings indicate that financial development supports productivity growth within firms, and helps explain why economic ...
Working Paper
Firm-Embedded Productivity and Cross-Country Income Differences
We measure the contribution of firm-embedded productivity to cross-country income differences. By firm-embedded productivity we refer to the components of productivity that differ across firms and that can be transferred internationally, such as blueprints, management practices, and intangible capital. Our approach relies on microlevel data on the cross-border operations of multinational enterprises (MNEs). We compare the market shares of the exact same MNE in different countries and document that they are about four times larger in developing than in high-income countries. This finding ...
Journal Article
The Lasting Damage from the Financial Crisis to U.S. Productivity
Michael Redmond and Willem Van Zandweghe find that tight credit conditions during the 2007?09 financial crisis dampened productivity, leaving it on a lower trajectory.
Working Paper
The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy
We study the impact of regional and sectoral productivity changes on the U.S. economy. To that end, we consider an environment that captures the effects of interregional and intersectoral trade in propagating disaggregated productivity changes at the level of a sector in a given U.S. state to the rest of the economy. The quantitative model we develop features pairwise interregional trade across all 50 U.S. states, 26 traded and non-traded industries, labor as a mobile factor, and structures and land as an immobile factor. We allow for sectoral linkages in the form of an intermediate input ...
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Estimation of cross-country differences in industry production functions.
International trade economists typically assume that there are no cross-country differences in industry total factor productivity (TFP). In contrast, this paper finds large and persistent TFP differences across a group of industrialized countries in the 1980s. The paper calculates TFP indices, and statistically examines the sources of the observed large TFP differences across countries. Two hypotheses are examined to account for TFP differences: constant returns to scale production with country-specific technological differences, and industry-level scale economies with identical technology in ...
Journal Article
Idiosyncratic Sectoral Growth, Balanced Growth, and Sectoral Linkages
We study the growth properties of an economy where different sectors are linked by way of intermediates and potentially grow at different rates. We characterize the economy's equilibrium balanced growth path, and derive an analytical expression that summarizes how TFP growth in a given sector affects value added growth in every other sector and, therefore, aggregate GDP growth. We show in a special case that a version of Hulten's (1978) theorem, whereby the effects of changes in sector-specific productivity on GDP are entirely captured by that sector's share in GDP, also holds in growth rates ...
Working Paper
Capital goods trade and economic development
We argue that international trade in capital goods has quantitatively important effects on economic development through two channels: (i) capital formation and (ii) aggregate TFP. We embed a multi country, multi sector Ricardian model of trade into a neoclassical growth model. Barriers to trade result in a misallocation of factors both within and across countries. Our model matches several trade and development facts within a unified framework. It is consistent with the world distribution of capital goods production, cross-country differences in investment rate and price of final goods, and ...
Working Paper
What Ties Us Together? Explaining Synchronized GDP Volatility
Amid heightened policy uncertainty, understanding the drivers of global macroeconomic instability becomes increasingly critical. This paper studies the determinants of output volatility synchronization using data for 42 economies worldwide. We construct a bilateral time-varying index of volatility synchronization and infer its drivers using Bayesian model averaging, complemented by weighted average least squares (WALS) and least absolute shrinkage and selection operator (LASSO) regression. We find that differences in total factor productivity, interest rate, and fiscal policy volatility ...