Description |
1 online resource (41 pages) |
Series |
IMF working paper ; WP/11/199 |
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IMF working paper ; WP/11/199.
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Contents |
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Theory; A.A Model Relating TFP and Financial Shocks; B. Creative Destruction and the "Cleansing" Effect; III. Empirical Strategy; A. Dependence on External Finance; B. Measuring Sectoral TFP Growth; C. The Cost of Funds; IV. Estimation Results; A. Baseline Regressions; B. Robustness Checks; V. Changes in the Cost of Equity and TFP Growth; A. Measuring the Cost of Equity; B. Empirical Results; VI. Discussion; VII. Conclusion; A. Tables; B. Figures; C. Proofs of Propositions; D. Calibration; References; Footnotes |
Summary |
The paper investigates how changes in industries' funding costs affect total factor productivity (TFP) growth. Based on panel regressions using 31 U.S. and Canadian industries between 1991 and 2007, and using industries' dependence on external funding as an identification mechanism, we show that increases in the cost of funds have a statistically significant and economically meaningful negative impact on TFP growth. This effect is, however, non-monotonic across sectors with different degrees of dependence on external finance. Our findings cannot be explained by either increasing returns to scale or factor hoarding, as results are not sensitive to controlling for industry size and our calculations account for changes in factor utilization. The paper presents a theoretical model that produces the observed non-monotonic effect of financial shocks on TFP growth and suggests that financial shocks distort the allocation of factors across firms even within an industry, thus reducing TFP growth |
Notes |
At head of title: Western Hemisphere Department |
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Title from PDF title page (IMF Web site, viewed September 13, 2011) |
Bibliography |
Includes bibliographical references |
Notes |
English |
Subject |
Industrial productivity -- United States -- Econometric models
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Industrial productivity -- Canada -- Econometric models
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Business cycles -- United States -- Econometric models
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Business cycles -- Canada -- Econometric models
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Business cycles -- Econometric models
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Industrial productivity -- Econometric models
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Canada
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United States
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Form |
Electronic book
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Author |
Severo, Tiago, author
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International Monetary Fund. Western Hemisphere Department, issuing body.
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ISBN |
1283553589 |
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9781283553582 |
|
1463901585 |
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9781463901585 |
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9781462304226 |
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1462304222 |
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9781463901592 |
|
1463901593 |
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1463900546 |
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9781463900540 |
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9786613866035 |
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6613866032 |
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