Financial frictions, capital misallocation, and input-output linkages
By: Su, Hsuan-Li
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Material type: 
BookPublisher: American Economic Journal: Microeconomics Description: 16(2), Apr, 2024: p.62-94.Subject(s): Input-Output Linkages, Sectoral Financial Distortions, Dynamic General Equilibrium, Capital Wedges, Allocative Efficiency, Total Factor Productivity (TFP), Systematic Uncertainty Shock, Idiosyncratic Sectoral Uncertainty, Network Amplification, US Data Calibration
In:
American Economic Journal: MicroeconomicsSummary: I study how input-output linkages amplify the aggregate impact of sectoral financial distortions in a dynamic general equilibrium model with endogenous capital wedges. The aggregate impact of a shock can be decomposed into weighted productivity changes and changes in allocative efficiency. A systematic uncertainty shock induces heterogenous responses in sectoral capital wedges, reducing allocative efficiency and aggregate total factor productivity (TFP). However, idiosyncratic sectoral uncertainty shocks may improve allocative efficiency and raise TFP. I then calibrate the model to US data. The network amplification magnitude on aggregate TFP ranges from 1.58 to 1.7.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mac.20190238
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 16(2), Apr, 2024: p.62-94 | Available | AR131739 |
I study how input-output linkages amplify the aggregate impact of sectoral financial distortions in a dynamic general equilibrium model with endogenous capital wedges. The aggregate impact of a shock can be decomposed into weighted productivity changes and changes in allocative efficiency. A systematic uncertainty shock induces heterogenous responses in sectoral capital wedges, reducing allocative efficiency and aggregate total factor productivity (TFP). However, idiosyncratic sectoral uncertainty shocks may improve allocative efficiency and raise TFP. I then calibrate the model to US data. The network amplification magnitude on aggregate TFP ranges from 1.58 to 1.7.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mac.20190238
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