Franklin

Financial Shocks and TFP L4318Growth [electronic resource] Severo, Tiago.

Author/Creator:
Severo, Tiago.
Publication:
Washington, D.C. : International Monetary Fund, 2010.
Series:
IMF eLibrary
IMF Working Papers; Working Paper No. 10/23.
IMF Working Papers; Working Paper No. 10/23
Format/Description:
Government document
Book
1 online resource (36 p.)
Local subjects:
Bond yields. (search)
Bonds. (search)
Business cycle theories. (search)
Business cycle theory. (search)
Business Fluctuations. (search)
Corporate bonds. (search)
Corporate sector. (search)
Cycles. (search)
Economic growth. (search)
Endogenous growth theory. (search)
Equity markets. (search)
External financing. (search)
External shocks. (search)
Financial dependence. (search)
Financial economics. (search)
Financial intermediaries. (search)
Financial intermediation. (search)
Financial markets. (search)
Financial Markets and the Macroeconomy. (search)
Financial system. (search)
Gdp growth. (search)
Growth rate. (search)
Growth rates. (search)
Industrial sector. (search)
Long-term bonds. (search)
Production. (search)
Production growth. (search)
Real business cycle. (search)
Real business cycle literature. (search)
Real business cycle theory. (search)
Stock prices. (search)
Term bonds. (search)
Yields on bonds. (search)
Canada. (search)
United States. (search)
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.
Notes:
Description based on print version record.
Contributor:
Estevão, Marcello M.
Severo, Tiago.
Other format:
Print Version:
ISBN:
1451962371:
9781451962376
ISSN:
1018-5941
Publisher Number:
10.5089/9781451962376.001
Access Restriction:
Restricted for use by site license.
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