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Time to produce and emerging market crises

Listed author(s):
  • Schwartzman, Felipe

After emerging market crises, value added falls more in manufacturing industries that normally exhibit higher inventory/cost ratios. Moreover, the difference in value added between manufacturing industries with different inventory/cost ratios persists years into the recovery. A shock to aggregate TFP cannot by itself match this pattern. In contrast, a persistent increase in the cost of foreign capital can. In the context of a calibrated multisector small open economy model, a shock to the cost of foreign capital consistent with the cross-industry data leads, 3–5years after the onset of the crisis, to an average reduction of output relative to a trend of 5.4 percent.

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File URL: http://www.sciencedirect.com/science/article/pii/S0304393214001160
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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 68 (2014)
Issue (Month): C ()
Pages: 37-52

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Handle: RePEc:eee:moneco:v:68:y:2014:i:c:p:37-52
DOI: 10.1016/j.jmoneco.2014.07.010
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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