Reallocation and Productivity during Commodity Cycles
I study the firm-level dynamic response of a commodity-exporting economy to global cycles in commodity prices. To do so, I develop a heterogeneous-firms model that endogenizes declines in aggregate productivity through reallocation towards less productive firms. Within a given sector, commodity booms reallocate market share away from exporters because of currency appreciation and away from capital-intensive firms because of the increase in capital cost. I provide empirical evidence for these channels using microdata for Chile, the worlds largest copper producer. When fed with the commodity super-cycle of 2003-2012, the calibrated model generates about 50% of the observed productivity decline.
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| Language: | English |
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Inter-American Development Bank
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| Subjects: | Productivity, Labor Productivity, Industrial Productivity, Commodity Price, Exchange Rate, Manufacturing Industry, F41 - Open Economy Macroeconomics, D24 - Production • Cost • Capital • Capital Total Factor and Multifactor Productivity • Capacity, Q33 - Resource Booms, Productivity;Resource booms;Open economy macroeconomics, |
| Online Access: | http://dx.doi.org/10.18235/0003203 https://publications.iadb.org/en/reallocation-and-productivity-during-commodity-cycles |
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