Misallocation and the recovery of manufacturing TFP after a financial crisis
AbstractThe Chilean economy experienced a decade of sustained growth in aggregate out-put and productivity after the 1982 .nancial crisis. This paper analyzes the effects of resource misallocation on total factor productivity (TFP) of the manufacturing sector by applying the methodology of Hsieh and Klenow (2009) to the establishment data from the Chilean manufacturing census. We find that a reduction in resource misallocation accounts for about 46 percent of the growth in manufacturing TFP between 1983 and 1996. The improvement in allocative effciency, moreover, is essentially driven by a reduction in the cross-sectional dispersion of output distortion. In particular, a reduction in the least productive plants.output subsidies is the most important reason for the reduction in resource misallocation during this period.
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Bibliographic InfoPaper provided by Norges Bank in its series Working Paper with number 2013/01.
Length: 34 pages
Date of creation: 07 Jan 2013
Date of revision:
Misallocation; TFP; Chile;
Find related papers by JEL classification:
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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