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dc.titleEfficient Reallocation and Productivity during Commodity Price Cycles
dc.contributor.authorHeresi, Rodrigo
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageChile
dc.date.available2019-09-20T00:00:00
dc.date.issue2019-09-20T00:00:00
dc.description.abstractThis paper investigates how low-frequency commodity price fluctuations trigger a reallocation process that endogenously generates a decline in manufacturing productivity. I build a model in which firms with heterogeneous productivity decide between two technologies with different capital intensities and choose whether to become exporters. During a commodity boom, exporters lose market share due to exchange rate appreciation. Moreover, a commodity boom increases the relative cost of capital, which is used intensively in resource production, leading to additional reallocation within manufacturing from more capital intensive to less capital-intensive manufacturing firms. I calibrate the model to the Chilean economy and show that it can match the relevant micro and macro moments. When fed with a realistic commodity price cycle, the baseline model generates about half of the productivity decline observed in the data, a figure that is two times larger than in a counterfactual economy with no technology decision.
dc.format.extent50
dc.identifier.doihttp://dx.doi.org/10.18235/0001887
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Efficient_Reallocation_and_Productivity_during_Commodity_Price_Cycles_en.pdf
dc.language.isoen
dc.mediumAdobe PDF
dc.publisherInter-American Development Bank
dc.subjectProductive Efficiency
dc.subjectCommodity Price
dc.subjectProduction and Business Cycle
dc.subject.jelcodeF41 - Open Economy Macroeconomics
dc.subject.jelcodeD24 - Production • Cost • Capital • Capital, Total Factor, and Multifactor Productivity • Capacity
dc.subject.jelcodeQ33 - Resource Booms
dc.typeDiscussion Papers
idb.identifier.pubnumberIDB-DP-00714
idb.operationRG-K1089
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