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Understanding Productivity During the Argentine Crisis

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  • Pablo Andrés Neumeyer
  • Guido Sandleris

Abstract

This paper studies resource misallocation in the Argentine manufacturing (1997-2002) sector using the methodology of Hsieh and Klenow (2008). The study shows that the potential gains in terms of aggregate total factor productivity of equalizing marginal productivities of factor inputs across firms in narrowly defined industries is between 50% and 55% in relatively normal years, slightly above the 43% found by HK for the US. During the 2002 crisis the reallocation gains climbed to 60/80%. Using HK's concept of TFPR as a measure of wedges in marginal products across firms, we find that the dispersion of wedges across firms in 1997 is similar to the USA one and in 2002 it is 20% higher; and that TFPR is strongly correlated with firm level productivity (and size). Firm productivity and TFPR are positively correlated with size, age, exporting status and foreign ownership, indicating that more productive firms are likely to be larger, older, exporters, foreign owned and have relatively higher marginal products. These results should be taken with caution due to the measurement error introduced by the coarseness of the factor input data available.

Suggested Citation

  • Pablo Andrés Neumeyer & Guido Sandleris, 2010. "Understanding Productivity During the Argentine Crisis," Business School Working Papers 2010-04, Universidad Torcuato Di Tella.
  • Handle: RePEc:udt:wpbsdt:2010-04
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    File URL: http://www.utdt.edu/download.php?fname=_128984278935517800.pdf
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Sobre la Asignación Eficiente de los Factores Productivos
      by Sebastian Galiani in Foco Económico on 2012-02-19 18:00:00

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    Cited by:

    1. Gita Gopinath & Brent Neiman, 2014. "Trade Adjustment and Productivity in Large Crises," American Economic Review, American Economic Association, vol. 104(3), pages 793-831, March.
    2. Kaiji Chen & Alfonso Irarrazabal, 2015. "The Role of Allocative Efficiency in a Decade of Recovery," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 523-550, July.
    3. Flora Bellone & Jérémy Mallen-Pisano, 2013. "Is Misallocation Higher in France than in the United States?," GREDEG Working Papers 2013-38, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    4. Kaiji Chen & Alfonso Irarrazabal, 2015. "The Role of Allocative Efficiency in a Decade of Recovery," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 523-550, July.
    5. Siwapong Dheera-Aumpon, 2014. "Misallocation and manufacturing TFP in Thailand," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 28(2), pages 63-76, November.
    6. Kaiji Chen & Alfonso Irarrazabal, 2013. "Misallocation and the recovery of manufacturing TFP after a financial crisis," Working Paper 2013/01, Norges Bank.

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