Misallocation and intersectoral linkages

Abstract

We study how intersectoral linkages shape the effects of distortions 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 fnd that the production network does not systematically amplify the aggregate productivity loss and that higher complementarity between inputs reduces the effects of distortions. We then use the model to quantify the effects of distortions caused by market power in 40 countries. The model indicates that the aggregate productivity cost of markups could be as high as 10 percent of GDP.

About the presenter's visit

Dr Sophie Osotimehin from the Universite du Quebec a Montreal will be visiting the School of Economics from 1-5 April 2019.  While here she will be using room 503A Colin Clark Building.  If you would like to meet with her or have lunch or dinner with her please contact Dr Jorge Miranda Pinto who will be her host while at The University of Queensland.  Dr Miranda Pinto can be contact on j.mirandapinto@uq.edu.au.