EconPapers    
Economics at your fingertips  
 

ON FINANCE AS A THEORY OF TFP, CROSS-INDUSTRY PRODUCTIVITY DIFFERENCES, AND ECONOMIC RENTS

Andres Erosa () and Ana Hidalgo-Cabrillana ()

International Economic Review, 2008, vol. 49, issue 2, 437-473

Abstract: We develop a theory of capital-market imperfections to study how the ability to enforce contracts affects resource allocation across entrepreneurs of different productivities, and across industries with different needs for external financing. The theory implies that countries with a poor ability to enforce contracts are characterized by the use of inefficient technologies, low aggregate TFP, large differences in labor productivity across industries, and large employment shares in industries with low productivity. These implications are supported by the empirical evidence. The theory also suggests that entrepreneurs have a vested interest in maintaining a status quo with low enforcement. Copyright ©2008 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (24) Track citations by RSS feed

Downloads: (external link)
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-2354.2008.00486.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: On Finance as a Theory of TFP, Cross-Industry Productivity Differences, and Economic Rents (2007) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ier:iecrev:v:49:y:2008:i:2:p:437-473

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0020-6598

Access Statistics for this article

International Economic Review is currently edited by Harold L. Cole

More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing ().

 
Page updated 2020-03-29
Handle: RePEc:ier:iecrev:v:49:y:2008:i:2:p:437-473