Reallocation and Productivity during Commodity Cycles

Rodrigo Heresi

No 11175, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: I study the firm-level dynamic response of a commodity-exporting economy to global cycles in commodity prices. To do so, I develop a heterogeneous-firms model that endogenizes declines in aggregate productivity through reallocation towards less productive firms. Within a given sector, commodity booms reallocate market share away from exporters because of currency appreciation and away from capital-intensive firms because of the increase in capital cost. I provide empirical evidence for these channels using microdata for Chile, the worlds largest copper producer. When fed with the commodity super-cycle of 2003-2012, the calibrated model generates about 50% of the observed productivity decline.

Keywords: Productivity; Resource booms; Open economy macroeconomics (search for similar items in EconPapers)
JEL-codes: D24 F41 Q33 (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-bec, nep-dge, nep-eff and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:11175

DOI: 10.18235/0003203

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