Impact of financial friction on productivity and international reserves with heterogeneous production functions
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During a sudden stop period in developing countries, the subsequent productivity drop is an interesting yet unexplained phenomenon. By assuming different capital levels for production, we show that a lack of capital caused by a sudden stop in developing countries may lead to a drop in output production and productivity. Furthermore, the optimal level of international reserves under an economy with indivisible technology increases more than the level under a benchmark economy with divisible technology because the cost of a sudden stop is larger.
Abstract
During a sudden stop period in developing countries, the subsequent productivity drop is an interesting yet unexplained phenomenon. By assuming different capital levels for production, we show that a lack of capital caused by a sudden stop in developing countries may lead to a drop in output production and productivity. Furthermore, the optimal level of international reserves under an economy with indivisible technology increases more than the level under a benchmark economy with divisible technology because the cost of a sudden stop is larger.
참고문헌 (14)
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