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Book Cover
Author Estevão, Marcello M., author

Title Financial shocks and TFP growth / Marcello Estevão and Tiago Severo
Published Washington, D.C. : International Monetary Fund, Western Hemisphere Dept., [2010]
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Description 1 online resource (24 pages) : illustrations
Series IMF working paper ; WP/10/23
IMF working paper ; WP/10/23
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 finding 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. Based on a stylized theoretical model, the estimates suggest that financial shocks distort the allocation of factors across firms even within an industry, reducing its TFP. The decline in productivity growth accounts for a large fraction of the negative impact of funding costs on output
Bibliography Includes bibliographical references (page 24)
Notes Print version record
Subject Business cycles.
Financial crises.
Industrial productivity.
Form Electronic book
Author Severo, Tiago, author
International Monetary Fund. Western Hemisphere Department, issuing body
ISBN 1451918712
1452774269 (electronic bk.)
9781452774268 (electronic bk.)