Aoki, Shuhei (2008): Inverse Ramsey Problem of the Resource Misallocation Effect on Aggregate Productivity.
Download (271Kb) | Preview
This paper examines the extent to and the conditions under which resource misallocation negatively affects aggregate productivity in a model of heterogeneous firms to the highest degree. I analytically derive the minimum aggregate total factor productivity (TFP) under resource misallocation, when frictions are modeled as the taxes levied on a firm's output, and the range of these taxes is provided. I find that the lower limit of the minimum aggregate TFP is the TFP under perfect substitute goods and constant returns to scale technology. Further, the minimum aggregate TFP is achieved when the proportion of firms in the lowest tax level is small or when the TFP level of these firms is low.
|Item Type:||MPRA Paper|
|Original Title:||Inverse Ramsey Problem of the Resource Misallocation Effect on Aggregate Productivity|
|Keywords:||distortions; firm heterogeneity; misallocation; productivity; Ramsey problem|
|Subjects:||O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
|Depositing User:||Shuhei Aoki|
|Date Deposited:||29. Mar 2008 06:46|
|Last Modified:||21. Feb 2013 06:07|
Alfaro, Laura, Andrew Charlton, and Fabio Kanczuk (2007) ``Firm-Size Distribution and Cross-Country Income Differences'', April. Mimeo.
Guner, Nezih, Gustavo Ventura, and Yi Xu (2008) ``Macroeconomic Implications of Size-Dependent Policies'', Forthcoming in Review of Economic Dynamics.
Hayashi, Fumio and Edward C. Prescott (2006) ``The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy'', March 2006. NBER Working Paper No. 12081, March 2006.
Hsieh, Chang-Tai and Peter J. Klenow (2007) ``Misallocation and Manufacturing TFP in China and India'', NBER Working Papers 13290, National Bureau of Economic Research, Inc.
Jones, Charles I. (2008) ``Intermediate Goods, Weak Links, and Superstars: A Theory of Economic Development'', NBER Working Papers 13834, National Bureau of Economic Research, Inc.
Manuelli, Rodolfo E. (2003) ``Policy Uncertainty, Total Factor Productivity and Growth'', July. Mimeo.
Melitz, Marc J. (2003) ``The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity'', Econometrica, Vol. 71, No. 6, pp. 1695--1725, November.
Parente, Stephen L. and Edward C. Prescott (1999) ``Monopoly Rights: A Barrier to Riches'', American Economic Review, Vol. 89, No. 5, pp.1216--1233, December.
Parente, Stephen L. and Edward C. Prescott (2005) ``A Unified Theory of the Evolution of International Income Levels'', in Philippe Aghion and Steven Durlauf eds. Handbook of Economic Growth, Vol. 1 of Handbook of Economic Growth: Elsevier, Chap. 21, pp. 1371--1416.
Restuccia, Diego and Richard Rogerson (2007) ``Policy Distortions and Aggregate Productivity with Heterogeneous Plants'', Working Papers tecipa-283, University of Toronto, Department of Economics.
Restuccia, Diego, Dennis Tao Yang, and Xiaodong Zhu (2008) ``Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis'', Forthcoming in Journal of Monetary Economics.
Available Versions of this Item
Inverse Ramsey Problem of the Resource Misallocation Effect on Aggregate Productivity. (deposited 26. Mar 2008 07:56)
- Inverse Ramsey Problem of the Resource Misallocation Effect on Aggregate Productivity. (deposited 29. Mar 2008 06:46) [Currently Displayed]