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Reallocation, competition, and productivity: evidence from a financial liberalization episode

Varela, Liliana (2018) Reallocation, competition, and productivity: evidence from a financial liberalization episode. Review of Economic Studies, 85 (2). pp. 1279-1313. ISSN 0034-6527

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Identification Number: 10.1093/restud/rdx046


This article studies the impact of distortions in the access to international capital markets on competition and productivity. I show that a reduction in these distortions leads to an increase in aggregate productivity through two different channels. First, firms that were previously credit constrained respond to better financing terms by increasing their investment in technology, a reallocation effect. Secondly, non-constrained firms also expand their investment in technology because of increased competition, a pro-competitive effect. I provide evidence for these two channels using firm-level census data from the deregulation of international financial flows in Hungary.

Item Type: Article
Additional Information: © 2018 Oxford University Press
Divisions: Finance
Subjects: H Social Sciences > HG Finance
JEL classification: F - International Economics > F3 - International Finance > F36 - Financial Aspects of Economic Integration
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output (Income) Convergence
Date Deposited: 11 Oct 2019 13:15
Last Modified: 13 Jun 2024 04:21

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