Aoki, Shuhei (2008): Inverse Ramsey Problem of the Resource Misallocation Effect on Aggregate Productivity.
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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, 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
|Depositing User:||Shuhei Aoki|
|Date Deposited:||29. Mar 2008 06:46|
|Last Modified:||21. Feb 2013 06:07|
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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]