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Keywords:total factor productivity 

Working Paper
A Model of Slow Recoveries from Financial Crises

This paper documents highly persistent effects of financial crises on output, labor productivity and employment in a sample of emerging economies. To address these facts, it introduces a quantitative macroeconomic model that includes endogenous TFP growth through firm creation. Firm creators obtain funding from a financial intermediation sector which is subject to frictions. These frictions become especially severe in a financial crisis, increasing the cost of credit for firm creators and thereby lowering the growth rate of aggregate TFP. As a consequence, the model produces medium-run ...
International Finance Discussion Papers , Paper 1097

Report
Estimation of cross-country differences in industry production functions.

International trade economists typically assume that there are no cross-country differences in industry total factor productivity (TFP). In contrast, this paper finds large and persistent TFP differences across a group of industrialized countries in the 1980s. The paper calculates TFP indices, and statistically examines the sources of the observed large TFP differences across countries. Two hypotheses are examined to account for TFP differences: constant returns to scale production with country-specific technological differences, and industry-level scale economies with identical technology in ...
Staff Reports , Paper 36

Journal Article
Time-Varying Skewness and Real Business Cycles

In the context of a quantitative real business cycle (RBC) model, we document that shocks to the higher-order moments, especially the skewness, of productivity can have large first-order effects on business cycles. We augment a standard small open economy RBC model with a new feature: a discrete regime switching between higher-order moments of total factor productivity shocks between an unrest state and a quiet state. To map the theory to data, we exploit an extensive database of mass political unrest around the world. We calibrate the model to the observed increases in the volatility and ...
Economic Quarterly , Issue 2Q , Pages 59-103

Journal Article
The Lasting Damage from the Financial Crisis to U.S. Productivity

Michael Redmond and Willem Van Zandweghe find that tight credit conditions during the 2007?09 financial crisis dampened productivity, leaving it on a lower trajectory.
Macro Bulletin

Speech
When the Facts Change…: remarks at the 9th High-Level Conference on the International Monetary System, Zürich, Switzerland

Remarks at the 9th High-Level Conference on the International Monetary System, Zrich, Switzerland.
Speech , Paper 320

Working Paper
The Trade Comovement Puzzle and the Margins of International Trade

Countries that trade more with each other tend to have more correlated business cycles. Yet, traditional international business cycle models predict a much weaker link between trade and business cycle comovement. We propose that fluctuations in the number of varieties embedded in trade flows may drive the observed comovement by increasing the correlation among trading partners? total factor productivity (TFP). Our hypothesis is that business cycles should be more correlated between countries that trade a wider variety of goods. We find empirical support for this hypothesis. After decomposing ...
Working Papers , Paper 2014-43

Working Paper
The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy

We study the impact of regional and sectoral productivity changes on the U.S. economy. To that end, we consider an environment that captures the effects of interregional and intersectoral trade in propagating disaggregated productivity changes at the level of a sector in a given U.S. state to the rest of the economy. The quantitative model we develop features pairwise interregional trade across all 50 U.S. states, 26 traded and non-traded industries, labor as a mobile factor, and structures and land as an immobile factor. We allow for sectoral linkages in the form of an intermediate input ...
International Finance Discussion Papers , Paper 1119

Working Paper
Identifying Structural VARs with a Proxy Variable and a Test for a Weak Proxy

This paper develops a simple estimator to identify structural shocks in vector autoregressions (VARs) by using a proxy variable that is correlated with the structural shock of interest but uncorrelated with other structural shocks. When the proxy variable is weak, modeled as local to zero, the estimator is inconsistent and converges to a distribution. This limiting distribution is characterized, and the estimator is shown to be asymptotically biased when the proxy variable is weak. The F statistic from the projection of the proxy variable onto the VAR errors can be used to test for a weak ...
Working Papers (Old Series) , Paper 1528

Working Paper
Finance and Productivity Growth: Firm-level Evidence

Using data on a broad set of European firms, we find a strong positive relationship between the use of external financing and future productivity (TFP) growth within firms. This relationship is robust to various measures of financing and productivity, and strengthens as financing costs increase. We provide evidence against a reverse-causality explanation by showing that this relationship arises from the component of TFP that is outside the information set of the firm. These findings indicate that financial development supports productivity growth within firms, and helps explain why economic ...
Finance and Economics Discussion Series , Paper 2014-17

Report
The Great Recession, entrepreneurship, and productivity performance

In recent years, it is argued, the level of entrepreneurial activity in the United States has declined, causing concern because of its potential macroeconomic implications. In particular, it is feared that a lower rate of firm creation may be associated with lower productivity growth and, hence, lower economic growth in the coming years. This paper studies the issue, focusing on the dynamics of entrepreneurship and productivity around the time of the Great Recession. The author looks first at the recent evolution of alternative measures of entrepreneurship and of productivity, and then ...
Current Policy Perspectives , Paper 14-8

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