Financial Frictions and Economic Development: A Quantitative Exploration

金融摩擦和经济发展：量化探索SBE-SES 0820318：Pi Shin(威斯康星大学)；Co-Pi Buera(NBER，次级奖项)了解跨国经济发展差异的来源是社会科学的中心问题。最近的实证研究提供了一些答案：跨国收入差距主要是由于发展中国家的全要素生产率较低，特别是在生产投资品/贸易品方面。生产单位之间的资源分配不当是它们生产率低下的一个重要来源。运转良好的金融市场是这些国家缺失的一个重要机构。该项目构建了一个统一的框架，对金融摩擦和资源错配进行了明确的建模，并对其对经济发展的影响进行了量化评估。本项目首先分析了金融摩擦是如何导致资源错配的，以及一些产业部门如何比其他部门更容易受到金融摩擦的影响。结果表明，一种结合了机构规模的部门差异的模式解释了为什么发展中国家在生产投资/贸易产品方面特别缺乏生产力。这一模式对跨国家和跨部门的编制规模分布模式有影响。这样的模型预测是根据机构层面的数据进行测试的。作为这个项目的一部分，一个关于发展中国家(如墨西哥和印度)和发达国家(如美国)机构规模分布的综合数据集被汇集在一起，与其他研究人员分享。该项目还研究了经济改革的动态影响，部分消除了经济中的扭曲。结果表明，金融摩擦和资源错配之间的相互作用对于理解与标准理论不相容的发展中国家的增长经验至关重要。与数据一致的是，该模型产生了向较高经济发展状态的缓慢过渡、发展初期的低利率和低投资率以及内生生产率动态。最后，本项目研究了国际和国内金融市场之间的互动如何决定经济发展。该模型用于研究跨境生产要素流动自由化后的过渡动态，这是许多发展中国家促进增长的一揽子改革的重要组成部分。特别是，它解决了一个令人困惑的观察结果，即正在经历产出和生产率增长时期的国家倾向于输出资本，这与标准理论相矛盾。此外，还解释了要素流动的其他维度，例如外国直接投资从发达国家流向发展中国家，而创业人才同时反向流动(人才外流)。更广泛地说，这个项目与将机构置于经济发展中心的文献有关：该项目中的金融摩擦被建模为由于合同执行不完善而产生的，这是更广泛的机构文献中的一个重要主题。在这方面，该项目树立了一个例子，说明如何对机构决定经济发展的机制进行量化分析。该项目对公共政策的设计和执行也很有用。通过应用其量化框架，人们可以回答有关经济改革的重要问题：改革多久才能开始见效？经济增长将以多快的速度惠及穷人？国际要素流动的最优政策是什么？

Financial Frictions and Economic Development: A Quantitative ExplorationSBE-SES 0820318: PI Shin (U of Wisconsin); Co-PI Buera (NBER, subaward)Understanding the sources of cross-country differences in economic development is a central question in the social sciences. Recent empirical research has provided some answers: Cross-country income differences are mainly explained by the low total factor productivity in developing countries, particularly in producing investment/tradable goods. Misallocation of resources across production units is an important source of their low productivity. Well-functioning financial markets are an important institution missing in these countries. This project constructs a unified framework where financial frictions and resource misallocation are explicitly modeled and their impact on economic development is quantitatively evaluated.This project first analyzes how financial frictions lead to resource misallocation, and how some industrial sectors are more vulnerable to financial frictions than others. It is shown that a model incorporating sectoral differences in the scale of establishments explains why developing countries are particularly unproductive in producing investment/tradable goods. This model has implications on the patterns of establishment size distribution across countries and across sectors. Such model predictions are tested against establishment-level data. As part of this project, a comprehensive data set on the size distribution of establishments in developing (e.g. Mexico and India) and developed countries (e.g. the US) is put together, to be shared with other researchers.The project also studies dynamic effects of an economic reform that partially eliminates distortions in the economy. It is shown that the interaction between financial frictions and resource misallocation is crucial in understanding growth experiences of developing countries that are incompatible with standard theories. Consistent with the data, the model generates a slow transition to a higher state of economic development, low interest and investment rates in the early stages of development, and endogenous productivity dynamics.Finally, this project studies how the interaction between international and domestic financial markets determines economic development. The model is used for studying the transition dynamics following liberalizations of cross-border production factor flows, which are an important part of growth-enhancing reform packages in many developing countries. In particular, it addresses the puzzling observation that countries going through a period of output and productivity growth tend to export capital, contradicting the standard theory. In addition, other dimensions of factor flows are explained, such as foreign direct investment flowing from developed to developing countries while entrepreneurial talent moves in the opposite direction (brain drain) at the same time.More broadly, this project is related to the literature that places institutions at the center of economic development: Financial frictions in this project are modeled as arising from imperfect enforcement of contracts, an important topic in the broader institutions literature. In this context, this project sets an example of how to quantitatively analyze the mechanisms through which institutions determine economic development. This project is also useful for the design and execution of public policies. By applying its quantitative framework, one can answer important questions on economic reforms: How soon will reforms start to pay off? How fast will economic growth trickle down to the poor? What are the optimal policies on international factor mobility?