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Cited by 648Economic Growth and ProductivityGlobal trade and economicsMonetary Policy and Economic Impact

The DOI matches its Crossref record; 61 of the 67 references it cites were found in a registry or an index.

“Productivity and Misallocation in General Equilibrium”

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Baqaee, David Rezza, Farhi, Emmanuel·2020·The Quarterly Journal of Economics
DOI 10.1093/qje/qjz030
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Abstract

This paper develops a general theory of aggregation in inefficient economies. We provide nonparametric formulas for aggregating microeconomic shocks in economies with distortions such as taxes, markups, frictions to resource reallocation, financial frictions, and nominal rigidities. We allow for arbitrary elasticities of substitution, returns to scale, factor mobility, and input-output network linkages. We show how to separately measure changes in technical and allocative efficiency. We also show how to compute the social cost of distortions. We pursue applications focusing on firm-level markups in the United States. We find that improvement in allocative efficiency, due to the reallocation over time of market share to high-markup firms, accounts for about half of aggregate TFP growth over the period 1997–2015. We also find that eliminating the misallocation resulting from the large and dispersed markups estimated in the data would raise aggregate TFP by about 15%, increasing the economy-wide cost of monopoly distortions by two orders of magnitude compared with the famous 0.1% estimate by Harberger (1954). These exact numbers should be interpreted with care because the data are imperfect and require substantial imputation.

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Research works printed but not linked: 5

  1. Autor, The Fall of the Labor Share and the Rise of Superstar Firms, Quarterly Journal of Economics
  2. Baqaee, 2017, Productivity and Misallocation in General Equilibrium, 10.3386/w24007 · DOI
  3. Hall, 1990, Solow's Productivity Residual, 71
  4. Hall, 1967, Tax Policy and Investment Behavior, American Economic Review, 57, 391
  5. Harberger, 1954, Monopoly and Resource Allocation, American Economic Association, Papers and Proceedings, 44, 77

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Metadata

Authors
Baqaee, D. R., & Farhi, E.
Affiliations
  • University of California, Los Angeles (US)
  • Harvard University (US)
ORCID
Farhi, Emmanuel
Venue
The Quarterly Journal of Economics
Publisher
Oxford University Press (OUP)
Published
2019-09-24
Volume
135
Issue
1
Pages
105-163
ISSN
  • 0033-5533 (ISSN-L)
  • 1531-4650
DOI
10.1093/qje/qjz030
OpenAlex
W2765215599
Cited by
648
References
67
Citations by year
2026: 99 · 2025: 110 · 2024: 91 · 2023: 95 · 2022: 72 · 2021: 64 · 2020: 58 · 2019: 28
FWCI
55.62
Type
journal article
Language
en
Open access
Licence
academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model (vor)
Locations
  • The Quarterly Journal of Economics (publishedVersion)
  • National Bureau of Economic Research (publishedVersion)
  • London School of Economics and Political Science Research Online (London School of Economics and Political Science) (acceptedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • London School of Economics and Political Science Research Online (London School of Economics and Political Science) (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
Keywords
resource misallocation, allocative efficiency, technical efficiency, markups, total factor productivity growth, market share reallocation, factor mobility, financial frictions, nominal rigidities, tax distortions

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