Financial Shocks and Productivity: Pricing Response and the TFPR-TFPQ Bifurcation

Lenzu, Simone; Rivers, David; Tielens, Joris

doi:10.2139/ssrn.3442156

Cited by 4 publications

(7 citation statements)

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“…15. Prices in are computed following standard literature: De Loecker, Fuss, and Van Biesebroeck (2014); Dhyne et al (2017); Amiti, Itskhoki, and Konings (2019); and Lenzu, Rivers, and Tielens (2019). Nonetheless, quality effects may be underestimated.…”

Section: Notesmentioning

confidence: 99%

Place, Productivity, and Prosperity: Revisiting Spatially Targeted Policies for Regional Development

Grover¹,

Lall²,

Maloney³

2022

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This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

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Section: Notesmentioning

confidence: 99%

Place, Productivity, and Prosperity: Revisiting Spatially Targeted Policies for Regional Development

Grover¹,

Lall²,

Maloney³

2022

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“…In a complementary way, we also explore information related to additional firm characteristics (in the spirit of Kim, 2021;Lenzu, Rivers, and Tielens, 2019). In particular, we investigate whether firms change their markups in order to deplete their inventories, as predicted by the fire-sales mechanism.…”

Section: Introductionmentioning

confidence: 99%

Markups and Financial Shocks

Meinen

Soares

2022

The Economic Journal

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This paper analyses the impact of financial frictions on markup adjustments at the firm level. We use a rich panel data set that matches information on banking relationships with firm-level data. By relying on insights from recent contributions in the literature, we obtain exogenous credit supply shifters and markups that are both firm specific and time varying. We uncover new findings at this level. In particular, firms more exposed to liquidity risks tend to raise markups in response to negative bank-loan supply shocks, while less exposed firms generally reduce them. Further empirical analyses suggest that our findings are mostly consistent with models featuring a sticky customer base, where financially constrained firms have an incentive to raise markups in order to sustain liquidity without losing too many customers. Our results have important economic implications regarding the cyclicality of the aggregate markup.

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Section: Introductionmentioning

confidence: 99%

“…Relatedly,Borenstein and Rose (1995) find that financial distress in US airline markets induces firms to lower output prices, andLenzu et al (2019) find that Belgium firms, on average, reduce output prices when hit by a negative bank-loan supply shock.17 As noted before, we also control for a firm's use of labor and capital inputs and the corresponding interaction term whenever we rely on the baseline Cobb-Douglas markup proxy.…”

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confidence: 99%

Markups and Financial Shocks

Meinen

Soares

2021

SSRN Journal

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Research QuestionRecent research shows that firm heterogeneity plays a crucial role in understanding the dynamics of aggregate market power. Several factors may influence markup adjustments at the firm level in different ways. In this paper, we analyse the impact of financial shocks on firms' markups, and, in particular, the ability of these shocks to generate heterogeneous markup dynamics across firms. ContributionWe do so by combining two state-of-the-art approaches and detailed German micro data from the Bundesbank for the years 2007-2013, which allow us to obtain estimates of both markups and financial shocks that vary across firms and time. By using matched bankfirm-level data, we can estimate bank-loan supply shifters that are exogenous from the perspective of the firm. Moreover, we follow a widely used approach, and corresponding applications and extensions, in order to estimate firm-level markups using data on firms' financial accounts. We can thus study the role of financial shocks in driving firm-level markups. Moreover, we investigate the economic mechanisms behind our results and gauge their implications at the aggregate level. ResultsWe find that markup responses to bank-credit supply shocks are heterogeneous across firms. In particular, firms more exposed to liquidity risks tend to raise markups in response to negative bank-loan supply shocks, while less exposed firms generally reduce them. The effects we find turn out to occur only contemporaneously, to be driven by more negative financial shocks, and to take place mainly during the financial crisis period. Further empirical analyses suggest that our findings are mostly consistent with models featuring a sticky customer base, where financially constrained firms have an incentive to raise markups in order to sustain liquidity. Finally, we present evidence that financial frictions can introduce a countercyclical dimension in the aggregate markup. Nichttechnische Zusammenfassung FragestellungJüngere Forschungsarbeiten zeigen, dass die Heterogenität von Unternehmen eine wichtige Rolle für die Entwicklung der durchschnittlichen Preisaufschläge in einer Volkswirtschaft spielt. Dabei können unterschiedliche Faktoren die Margen von Unternehmen auf verschiedene Weisen beeinflussen. In diesem Papier wird der Einfluss von Finanzmarktfriktionen auf die Preisaufschläge von Firmen analysiert. Dabei wird insbesondere untersucht, inwieweit Finanzmarktschocks heterogene Margenanpassungen bei Unternehmen verursachen. Beitrag Dazu werden auf Basis moderner empirischer Ansätze und detaillierter deutscher Mikrodaten der Bundesbank für die Jahre 2007 bis 2013 Finanzmarktschocks und Preisaufschläge geschätzt, die über Unternehmen und Jahre variieren. Insbesondere können anhand von Einzeldaten zur Kreditvergabe von Banken an Unternehmen Finanzmarktstörungen geschätzt werden, die Bankkreditangebotsschocks entsprechen und daher aus Sicht der Unternehmen exogen bedingt sind. Zudem werden auf Basis einer weitverbreiteten Methode Preisaufschläge von Firmen anhand von Bilanzinf...

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Financial Shocks and Productivity: Pricing Response and the TFPR-TFPQ Bifurcation

Cited by 4 publications

References 56 publications

Place, Productivity, and Prosperity: Revisiting Spatially Targeted Policies for Regional Development

Place, Productivity, and Prosperity: Revisiting Spatially Targeted Policies for Regional Development

Markups and Financial Shocks

Markups and Financial Shocks

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