Aoki, Shuhei (2008): A Simple Accounting Framework for the Effect of Resource Misallocation on Aggregate Productivity.
Download (352kB) | Preview
This paper develops a simple accounting framework that measures the effect of resource misallocation on aggregate productivity. This framework is based on a multi-sector general equilibrium model with sector-specific frictions in the form of taxes on sectoral factor inputs. Our framework is flexible for the assumption on preferences or aggregate production functions. Moreover, this framework is consistent with that commonly used in productivity analysis. I apply this framework to measure to what extent resource misallocation explains the differences in aggregate productivity across developed countries. I find that resource misallocation explains, on average, about 25% of the differences in the measured aggregate productivity among developed countries. I also provide methods to decompose the causes of the misallocation effect.
|Item Type:||MPRA Paper|
|Original Title:||A Simple Accounting Framework for the Effect of Resource Misallocation on Aggregate Productivity|
|Keywords:||distortions; frictions; productivity; resource allocation|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E23 - Production
|Depositing User:||Shuhei Aoki|
|Date Deposited:||11. Nov 2008 03:17|
|Last Modified:||16. Feb 2013 15:25|
Aoki, S., 2006. A simple accounting framework for distortion on sectoral resource allocation. Paper presented at the 2006 Fall Meeting of Japan Economic Association.
Basu, S. and J. G. Fernald, 2002. Aggregate productivity and aggregate technology. European Economic Review 46, 963–991.
Caballero, R. J., T. Hoshi, and A. K. Kashyap, 2008. Zombie lending and depressed restructuring in japan. American Economic Review, forthcoming.
Caves, D. W., L. R. Christensen, and W. E. Diewert, 1982. Multilateral comparisons of output, input, and productivity using superlative index numbers. Economic Journal 92, 73–86.
Chari, V. V., P. J. Kehoe, and E. R. McGrattan, 2002. Accounting for the great depression. American Economic Review 92, 22–27.
Christensen, L. R., D. W. Jorgenson, and L. J. Lau, 1973. Transcendental logarithmic production frontiers. Review of Economics and Statistics 55, 28–45.
de Melo, J. A. P., 1977. Distortions in the factor market: Some general equilibrium estimates. Review of Economics and Statistics 59, 398–405.
Domar, E. D., 1961. On the measurement of technological change. Economic Journal 71, 709–729.
Hayashi, F. and E. C. Prescott, 2008. The depressing effect of agricultural institutions on the prewar japanese economy. Journal of Political Economy, forthcoming.
Hsieh, C.-T. and P. J. Klenow, 2007. Misallocation and manufacturing tfp in china and india. NBER Working Papers 13290, National Bureau of Economic Research, Inc.
Jermann, U. and V. Quadrini, 2006. Financial innovations and macroeconomic volatility. NBER Working Papers 12308, National Bureau of Economic Research, Inc.
Kiyotaki, N. and J. Moore, 1997. Credit cycles. Journal of Political Economy 105, 211–248.
Miyagawa, T., K. Fukao, S. Hamagata, and M. Takizawa, 2008. Efficiency of sector-level resource allocation (in japanese). In Fukao, K. and T. Miyagawa (Eds.). Productivity and Japan’s Economic Growth: Industry-Level and Firm-Level Studies Based on the JIP Database. Tokyo: University of Tokyo Press, 129–155.
Parente, S. L. and E. C. Prescott, 2000. Barriers to Riches (Walras-Pareto Lecture Series). Cambridge: MIT Press.
Prescott, E. C., 2002. Richard t. ely lecture: Prosperity and depression. American Economic Review 92, 1–15.
Restuccia, D. and R. Rogerson, 2008. Policy distortions and aggregate productivity with heterogeneous establishments. Review of Economic Dynamics 11, 707–720.
Restuccia, D., D. T. Yang, and X. Zhu, 2008. Agriculture and aggregate productivity: A quantitative cross-country analysis. Journal of Monetary Economics 55, 234–250.
Syrquin, M., 1986. Productivity growth and factor reallocation. In Chenery, H. B. and M. Syrquin (Eds.). Industrialization and Growth: A Comparative Study. New York: Oxford University Press, 229–262.
Vollrath, D., 2008. How important are dual economy effects for aggregate productivity? Journal of Development Economics, forthcoming.
Available Versions of this Item
- A Simple Accounting Framework for the Effect of Resource Misallocation on Aggregate Productivity. (deposited 11. Nov 2008 03:17) [Currently Displayed]