 Aggregate productivity, leased capital and market participationLinqing You Journal of Corporate Finance, 2024, vol. 87, issue C Abstract: The operating lease accounts for a large fraction of firms’ total productive physical capital and it is important for firms’ investment and real production. Empirical facts show that the aggregate productivity measure is an overestimation without considering leased capital (Hu et al., 2024). In this paper, I explore the effect of leased capital on aggregate productivity in general equilibrium. Leased capital can directly alleviate collateral constraints and mitigate capital misallocation, boosting aggregate productivity (Hu et al., 2020). However, leasing can lead to an increased demand for labor, driving up wages, which results in a decrease in the number of producing firms and their optimal capital scale. These indirect effects can lead to a decline in aggregate productivity. Quantitatively, the indirect effects dominate the direct effects with counterfactual leasing-improved policy, and thus aggregate productivity with leased capital decreases. Keywords: Aggregate productivity; Leased capital; Collateral constraints; Market participation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:87:y:2024:i:c:s092911992400083x DOI: 10.1016/j.jcorpfin.2024.102621 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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