Finance and misallocation: Evidence from plant-level data
Publication
, Journal Article
Midrigan, V; Xu, DY
Published in: American Economic Review
February 1, 2014
We use producer-level data to evaluate the role of financial frictions in determining total factor productivity (TFP). We study a model of establishment dynamics in which financial frictions reduce TFP through two channels. First, finance frictions distort entry and technology adoption decisions. Second, finance frictions generate dispersion in the returns to capital across existing producers and thus productivity losses from misallocation. Parameterizations of our model consistent with the data imply fairly small losses from misallocation, but potentially sizable losses from inefficiently low levels of entry and technology adoption. Copyright © 2014 by the American Economic Association.
Duke Scholars
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Published In
American Economic Review
DOI
ISSN
0002-8282
Publication Date
February 1, 2014
Volume
104
Issue
2
Start / End Page
422 / 458
Related Subject Headings
- Economics
- 38 Economics
- 35 Commerce, management, tourism and services
- 15 Commerce, Management, Tourism and Services
- 14 Economics
Citation
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Midrigan, V., & Xu, D. Y. (2014). Finance and misallocation: Evidence from plant-level data. American Economic Review, 104(2), 422–458. https://doi.org/10.1257/aer.104.2.422
Midrigan, V., and D. Y. Xu. “Finance and misallocation: Evidence from plant-level data.” American Economic Review 104, no. 2 (February 1, 2014): 422–58. https://doi.org/10.1257/aer.104.2.422.
Midrigan V, Xu DY. Finance and misallocation: Evidence from plant-level data. American Economic Review. 2014 Feb 1;104(2):422–58.
Midrigan, V., and D. Y. Xu. “Finance and misallocation: Evidence from plant-level data.” American Economic Review, vol. 104, no. 2, Feb. 2014, pp. 422–58. Scopus, doi:10.1257/aer.104.2.422.
Midrigan V, Xu DY. Finance and misallocation: Evidence from plant-level data. American Economic Review. 2014 Feb 1;104(2):422–458.
Published In
American Economic Review
DOI
ISSN
0002-8282
Publication Date
February 1, 2014
Volume
104
Issue
2
Start / End Page
422 / 458
Related Subject Headings
- Economics
- 38 Economics
- 35 Commerce, management, tourism and services
- 15 Commerce, Management, Tourism and Services
- 14 Economics