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Author Estevão, Marcello M., author

Title Shocks, financial dependence, and efficiency : evidence from U.S. and Canadian industries / Marcello Estevão and Tiago Severo
Published [Washington, D.C.] : International Monetary Fund, [2011]
©2011
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Description 1 online resource (41 pages)
Series IMF working paper ; WP/11/199
IMF working paper ; WP/11/199
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
Title from PDF title page (IMF Web site, viewed September 13, 2011)
Bibliography Includes bibliographical references
Subject Business cycles -- Canada -- Econometric models.
Business cycles -- United States -- Econometric models.
Industrial productivity -- Canada -- Econometric models.
Industrial productivity -- United States -- Econometric models.
Form Electronic book
Author Severo, Tiago, author
International Monetary Fund. Western Hemisphere Department, issuing body
ISBN 1283553589
1462304222
1463901585 (electronic bk.)
1463901593
9781283553582
9781462304226
9781463901585 (electronic bk.)
9781463901592