Time to produce and emerging market crises

Felipe Schwartzman

Journal of Monetary Economics, 2014, vol. 68, issue C, 37-52

Abstract: After emerging market crises, value added falls more in manufacturing industries that normally exhibit higher inventory/cost ratios. Moreover, the difference in value added between manufacturing industries with different inventory/cost ratios persists years into the recovery. A shock to aggregate TFP cannot by itself match this pattern. In contrast, a persistent increase in the cost of foreign capital can. In the context of a calibrated multisector small open economy model, a shock to the cost of foreign capital consistent with the cross-industry data leads, 3–5years after the onset of the crisis, to an average reduction of output relative to a trend of 5.4 percent.

Keywords: Working capital; Time to build; Crises; Inventories; Emerging markets (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (9)

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Working Paper: Time to produce and emerging market crises (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:68:y:2014:i:c:p:37-52

DOI: 10.1016/j.jmoneco.2014.07.010

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