Sophie Osotimehin, U. of Quebec, Montreal on our campus
Misallocation and Intersectoral Linkages
Location
Public Policy : 451
Date & Time
October 11, 2018, 12:00 pm – 1:00 pm
Description
O
Sophie Osotimehin
Department of Economics
University of Quebec at Montreal
October 11th, 12-1PM, Public Policy 451
We study the effects of distortions in the use of primary and intermediate inputs on aggregate productivity. We show analytically how the aggregate productivity loss from distortions depends on the input-output structure of the economy and the degree of complementarity between inputs. We find that the production network does not systematically amplify the aggregate productivity loss, and that higher complementarity between inputs reduce the effects of distortions. Then, we apply our framework to quantify the effects of distortions caused by market power. Calibrated on Mexican industry-level data, the model suggests that reducing industry-level markups in Mexico to the US levels could raise aggregate TFP by as much as 15 percent. The TFP gain is as much as 5 times larger than without input-output linkages.
Thank you to the Office of the Dean of CAHSS, the Office of the Vice President for Research, and the Center for Social Science Scholarship for their support of the seminar series.
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