Impacts of (individual and aggregate) productivity and credit shocks on equilibrium aggregate production

Ngoc-Sang Pham

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Abstract: In a market economy, the aggregate production level depends not only on the aggregate variables but also on the distribution of individual characteristics (e.g., productivity, credit limit, ...). We point out that, due to financial frictions the equilibrium aggregate production may be non-monotonic in both individual productivity and credit limit. By consequence, the emergence of some firms (for example, improving productivity or relaxing credit limit) may not necessarily be beneficial to economic development.

Keywords: Productivity shock; Financial shock; Credit constraint; Heterogeneity; Productivity dispersion; Distributional effects; Efficiency; General equilibrium (search for similar items in EconPapers)
Date: 2022-06-02
New Economics Papers: this item is included in nep-eff and nep-fdg
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Working Paper: Impacts of (individual and aggregate) productivity and credit shocks on equilibrium aggregate production (2023)
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