Impact of financial friction on productivity and international reserves with heterogeneous production functions

• Autores: Hyunsoo Joo
• Localización: Journal of economic research, ISSN 1226-4261, Vol. 22, Nº. 1, 2017, págs. 89-102
• Idioma: inglés
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• Resumen

  • 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