IDEAS home Printed from
   My bibliography  Save this paper

Productivity and Misallocation During a Crisis


  • Ezra Oberfield

    (Federal Reserve Bank of Chicago)


Measured total factor productivity often declines sharply during financial crises. In 1982, the Chilean manufacturing sector suffered a severe contraction in output, most of which can be accounted for a falling Solow residual. Using establishment data from the Chilean manufacturing census, I assess the contribution of misallocation to the drop in output. Using several measures, I find that the cross-sectional allocation of resources deteriorated during the crisis. To quantify the impact of this misallocation on aggregate measured TFP I develop a decomposition along the lines of Hsieh and Klenow (2009). The analysis allows for specifications that span two extremes: (i) all plants have identical factor intensities (ii) plants differ in factor intensities within each sector. While this raises difficult aggregation issues, I show the connection between changes in the extent of misallocation and changes in an aggregate Solow residual. Although the preliminary results are sensitive to the exact empirical specification, I find that increased misallocation had a substantial impact on aggregate total factor productivity during the crisis.

Suggested Citation

  • Ezra Oberfield, 2011. "Productivity and Misallocation During a Crisis," 2011 Meeting Papers 1328, Society for Economic Dynamics.
  • Handle: RePEc:red:sed011:1328

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Susanto Basu & Luigi Pascali & Fabio Schiantarelli & Luis Serven, 2009. "Productivity, Welfare and Reallocation: Theory and Firm Level Evidence," Boston College Working Papers in Economics 728, Boston College Department of Economics, revised 12 Jul 2010.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Gita Gopinath & Şebnem Kalemli-Özcan & Loukas Karabarbounis & Carolina Villegas-Sanchez, 2017. "Capital Allocation and Productivity in South Europe," The Quarterly Journal of Economics, Oxford University Press, vol. 132(4), pages 1915-1967.
    2. Dias, Daniel A. & Robalo Marques, Carlos & Richmond, Christine, 2016. "Misallocation and productivity in the lead up to the Eurozone crisis," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 46-70.
    3. Nicolas Ziebarth, 2013. "Are China and India Backwards? Evidence from the 19th Century U.S. Census of Manufactures," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 86-99, January.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed011:1328. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.