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Reallocation, Competition and Productivity: Evidence from a Financial Liberalization Episode

Listed author(s):
  • Liliana Varela

    ()

    (University of Houston)

This paper studies the impact of distortions in the access to international capital markets on competition and productivity. I show that a reduction in these distortions leads to an increase in aggregate productivity through two different channels. First, previously credit-constrained firms respond to better financing terms by increasing their investment in technology, a reallocation effect. Second, non-constrained firms also expand their investment in technology due to increased competition, a pro-competitive effect. I provide evidence for these two channels using firm-level census data around the deregulation of international financial flows in Hungary.

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File URL: http://www.uh.edu/econpapers/RePEc/hou/wpaper/2015-042-23.pdf
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Paper provided by Department of Economics, University of Houston in its series Working Papers with number 2015-042-23.

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Date of creation: 11 Feb 2015
Handle: RePEc:hou:wpaper:2015-042-23
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Houston TX 77023

Web page: http://www.uh.edu/class/economics/

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