Impact of policy distortions on firm-level innovation, productivity dynamics and TFP

Misallocation, Establishment Size, and Productivity

“…10 Early examples of this literature include Restuccia (2013b) and Bello et al (2011) with more elaborate analysis in Ranasinghe (2014), Bhattacharya et al (2013), Gabler and Poschke (2013), Hsieh andKlenow (2014), andDa-Rocha et al (2015). Closely related to our work is Hsieh and Klenow (2014) who consider the impact of correlated distortions on life-cycle productivity growth of establishments and aggregate TFP.…”

Rent-Seeking Activities, Misallocation, and Innovation in Argentina

“…As documented in Aw, Roberts, and Xu (2011), firms that invest in R&D on average increase their productivity over time. Boothby, Lau, and Songsakul (2008) and Ranasinghe (2014) documented the patterns of R&D expenditure for U.S. firms based on a data set provided by the National Science Foundation, and they found that R&D (when measured as employment) is increasing.…”

“…Following Ranasinghe's (2014) strategy, I calibrate the curvature parameter bz of the innovation cost to target average R&D spending by firms that have between 500 and 1,000 employees relative to average R&D spending by firms that have between 1,000 and 5,000 employees. The scale parameter hz of the cost of R&D is closely related to the total spending on innovation.…”

Agglomeration economies and firm-level labor misallocation

“…A third strand of literature focuses on the dynamics of allocative inefficiency. Ranasinghe (2014) systematizes the idea proposed by Bento and Restuccia (2014) that one of the mechanisms at play is the impact of distortions on the incentive to invest to enhance productivity beyond the reallocation of resources within the firm. Firm productivity is endogenous and driven by investment decisions , conditional on the institutional environment of the firm.…”