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Most Downloaded Articles
- Comparing Wealth Effects: The Stock Market versus the Housing Market by Case, Karl E./ Quigley, John M. and Shiller, Robert J.
- Who Gets the Credit? And Does It Matter? Household vs. Firm Lending Across Countries by Beck, Thorsten/ Büyükkarabacak, Berrak/ Rioja, Felix K. and Valev, Neven T.
- Monetary and Macroprudential Policy Rules in a Model with House Price Booms by Kannan, Prakash/ Rabanal, Pau and Scott, Alasdair M.
- Is Discretionary Fiscal Policy in Japan Effective? by Rafiq, Sohrab
- In search of lost time: the neoclassical synthesis by De Vroey, Michel and Duarte, Pedro Garcia
Factor Utilization and the Real Impact of Financial Crises
1Universidad Carlos III de Madrid, firstname.lastname@example.org
2Federal Reserve Bank of Dallas, email@example.com
Citation Information: The B.E. Journal of Macroeconomics. Volume 7, Issue 1, Pages –, ISSN (Online) 1935-1690, DOI: 10.2202/1935-1690.1593, September 2007
- Published Online:
Total factor productivity (TFP) falls markedly during financial crises, as we document with recent evidence from Latin America and Asia. We study the ability of various versions of the small open economy neoclassical growth model to account for the behavior of inputs, output, and aggregate productivity during Mexico's 1994-95 crisis. We find that that capital utilization and labor hoarding can account for a large fraction of the fall in measured productivity. While capital utilization alone does little to improve the performance of the model during the crisis, introducing labor hoarding significantly reduces the gap between the evidence and the predicted fall in output and hours.