Capital allocation and productivity in south europe

Gita Gopinath, ŞEbnem Kalemli-Özcan, Loukas Karabarbounis, Carolina Villegas-Sanchez

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265 Cites (Scopus)

Resum

Starting in the early 1990s, countries in southern Europe experienced low productivity growth alongside declining real interest rates.We use data for manufacturing firms in Spain between 1999 and 2012 to document a significant increase in the dispersion of the return to capital across firms, a stable dispersion of the return to labor, and a significant increase in productivity losses from capital misallocation over time.We develop a model with size-dependent financial frictions that is consistent with important aspects of firms' behavior in production and balance sheet data. We illustrate how the decline in the real interest rate, often attributed to the euro convergence process, leads to a significant decline in sectoral total factor productivity as capital inflows are misallocated toward firms that have higher net worth but are not necessarily more productive. We show that similar trends in dispersion and productivity losses are observed in Italy and Portugal but not in Germany, France, and Norway. JEL Codes: D24, E22, F41, O16, O47.

Idioma originalAnglès
Pàgines (de-a)1915-1967
Nombre de pàgines53
RevistaQuarterly Journal of Economics
Volum132
Número4
DOIs
Estat de la publicacióPublicada - 1 de nov. 2017

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