English, Article, Journal or magazine article edition: On Capital Market Imperfections as an Origin of Low TFP and Economic Rents Ana Hidalgo; Andres Erosa

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Bookmark: http://trove.nla.gov.au/version/56989
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • On Capital Market Imperfections as an Origin of Low TFP and Economic Rents
Author
  • Ana Hidalgo
  • Andres Erosa
Physical Description
  • preprint
Notes
  • We propose a theory where capital market imperfections are at the origin of cross-country TFP differences. In our theory entrepreneurs have private information about the multifactor productivity of their technology. We study how the contracting environment, as described by the ability to enforce contracts, affects the provision of incentives and, thus, resource allocation to and across entrepreneurs. We assume that countries differ in the ability to enforce contracts and show that, in the presence of assymmetric information, countries with low enforcement use inefficient technologies in equilibrium and are characterized by differences in productivity across industries. Our theory also suggests that entrepreneurs have a vested interest in maintaining a status quo with low enforcement since it allows them to extract rents from the factor services they hire.
  • Capital Market Imperfections, Total Factor Productivity, Relative Price Distortions, Taxation
  • RePEc:red:sed004:16
Language
  • English
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