Caselli, Francesco 
ORCID: 0009-0001-5191-7156 and Gennaioli, Nicola
(2003)
Dynastic management.
.
National Bureau of Economic Research, Cambridge, MA., USA.
Abstract
Dynastic management is the inter-generational transmission of control over assets that is typical of family-owned firms. It is pervasive around the World, but especially in developing countries. We argue that dynastic management is a potential source of inefficiency: if the heir to the family firm has no talent for managerial decision making, meritocracy fails. We present a simple model that studies the macreconomic causes and consequences of this phenomenon. In our model, the incidence of dynastic management depends on the severity of asset-market imperfections, on the economy's saving rate, and on the degree of inheritability of talent across generations. We therefore introduce novel channels through which financial-market failures and saving rates affect aggregate total factor productivity. Numerical simulations suggest that dynastic management may be a substantial contributor to observed cross-country differences in productivity.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Official URL: | http://www.nber.org |
| Additional Information: | © 2003 Francesco Caselli and Nicola Gennaioli |
| Divisions: | Centre for Economic Performance Economics |
| Subjects: | H Social Sciences > HG Finance H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor |
| JEL classification: | E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment G - Financial Economics > G3 - Corporate Finance and Governance G - Financial Economics > G1 - General Financial Markets O - Economic Development, Technological Change, and Growth > O1 - Economic Development O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models |
| Date Deposited: | 03 Jun 2008 15:26 |
| Last Modified: | 01 Oct 2024 03:16 |
| URI: | http://eprints.lse.ac.uk/id/eprint/5299 |
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