The role of allocative efficiency in a decade of recovery
Journal article, Peer reviewed
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http://hdl.handle.net/11250/2375245Utgivelsesdato
2015Metadata
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Sammendrag
The Chilean economy experienced a decade of sustained growth in aggregate output
and productivity after the 1982 nancial crisis. This paper analyzes the role of allocative
e¢ ciency on total factor productivity (TFP) in the manufacturing sector by applying the
methodology of Hsieh and Klenow (2009) to establishment data from the Chilean manu-
facturing census. We nd that a reduction in resource misallocation accounts for about 40
percent of the growth in manufacturing TFP between 1983 and 1996. In particular, a reduc-
tion in the least productive plants implicit output subsidies is the primary reason for the
reduction in resource misallocation during this period. Moreover, these plants enjoyed above
industry-average growth in physical productivity, contributing to the overall improvement
in e¢ cient TFP after the nancial crisis. Our evidence suggests that Chile s banking reform
during the early and mid-1980s is likely to have played an important role in the observed
improvement in allocative e¢ ciency.
Beskrivelse
This is the accepted and refereed manuscript to the article