scholarly journals Collateral Booms and Information Depletion

2021 ◽  
Author(s):  
Vladimir Asriyan ◽  
Luc Laeven ◽  
Alberto Martín
Keyword(s):  
Real Estate ◽  
Economic Activity ◽  
Empirical Support ◽  
Firm Level ◽  
Investment Projects ◽  
Credit Booms ◽  
Lack Of Information ◽  
Level Data ◽  
Firm Level Data ◽  
Theory Of Information

Abstract We develop a new theory of information production during credit booms. Entrepreneurs need credit to undertake investment projects, some of which enable them to divert resources. Lenders can protect themselves from such diversion in two ways: collateralization and costly screening, which generates durable information about projects. In equilibrium, the collateralization-screening mix depends on the value of aggregate collateral. High collateral values make it possible to reallocate resources towards productive projects, but they also crowd out screening. This has important dynamic implications. During credit booms driven by high collateral values (e.g. real estate booms), economic activity expands but the economy’s stock of information on existing projects gets depleted. As a result, collateral-driven booms end in deep crises and slow recoveries: when booms end, investment is constrained both by the lack of collateral and by the lack of information on existing projects, which takes time to rebuild. We provide empirical support for the mechanism using US firm-level data.

scholarly journals Firm Sorting and Agglomeration

2018 ◽  
Vol 108 (11) ◽  
pp. 3117-3153 ◽  
Author(s):  
Cecile Gaubert
Keyword(s):  
General Equilibrium ◽  
Economic Activity ◽  
Heterogeneous Firms ◽  
Agglomeration Economies ◽  
Firm Level ◽  
Large Cities ◽  
French Firm ◽  
Level Data ◽  
Firm Level Data ◽  
Aggregate Effects

To account for the uneven distribution of economic activity in space, I propose a theory of the location choices of heterogeneous firms in a variety of sectors across cities. In equilibrium, the distribution of city sizes and the sorting patterns of firms are uniquely determined and affect aggregate TFP and welfare. I estimate the model using French firm-level data and find that nearly half of the productivity advantage of large cities is due to firm sorting, the rest coming from agglomeration economies. I quantify the general equilibrium effects of place-based policies: policies that subsidize smaller cities have negative aggregate effects. (JEL D22, D24, R11, R32)

Firm-Level Economic Activity Before, During, and After Local Events: A Case Study

2020 ◽  
Vol 21 (4) ◽  
pp. 327-334 ◽  
Author(s):  
Craig A. Depken ◽  
Benjamin L. Fore
Keyword(s):  
Economic Activity ◽  
National Football League ◽  
Future Research ◽  
Firm Level ◽  
Level Data ◽  
National Convention ◽  
Firm Level Data ◽  
Convention Center ◽  
Center City

This case study investigates how various sporting and cultural events impact economic activity at a single full-service restaurant in center-city Charlotte, NC. We find no evidence of significant changes in daily revenue, customers served, and revenue per customer on the day before, day of, and day after many of the events. The exceptions are National Football League (NFL) home games, swimming events, events at the Charlotte Convention Center, the 2012 Democratic National Convention, NASCAR races, PGA tournaments, and entertainment events at the Spectrum Center. The results invite future research using firm-level data to better understand the disparate impact of events on business enterprises.

scholarly journals Fear the Walking Dead? Incidence and Effects of Zombie Firms in Europe

2018 ◽  
Vol 1 (1) ◽  
Author(s):  
Issam Hallak ◽  
Péter Harasztosi ◽  
Sebastian Schich
Keyword(s):  
Czech Republic ◽  
Economic Activity ◽  
Policy Implication ◽  
European Countries ◽  
Firm Level ◽  
The Czech Republic ◽  
Corporate Capital ◽  
The Walking Dead ◽  
Level Data ◽  
Firm Level Data

One explanation for the observed lack of economic dynamism in Europe is that so-called zombie firms are spreading and that they crowd out the growth of other, potentially more “lively”, companies. Zombie firms are firms that apparently are unable to repay their debt and yet, they continue operating. The report describes estimates for 2010 and 2013 of the incidence of zombie firms across 19 European countries using firm-level data for more than one million companies. Importantly, it uses three alternative definitions of what constitutes a zombie firm to ensure robustness of estimates. The report finds that zombie firms are spreading in Europe, with the estimated incidence for 2013 being higher than for 2010. It also identifies considerable differences across countries. Zombie firm shares as of overall corporate capital are particularly high in Greece and Spain, but low in the Czech Republic and Slovakia. Distinguish among firms in terms of size and age, the report finds that larger and older firms, as compared to relatively smaller and younger firms, are more likely to be zombie firms. The report also finds that the growth of zombie firms in terms of employment crowds out the growth of other, non-zombie firms, especially young ones. Thus, one policy implication is that, greater economic activity is achieved by allowing zombie firms to exit the market.

scholarly journals Outward FDI and Domestic Input Distortions: Evidence from Chinese Firms

2019 ◽  
Vol 129 (624) ◽  
pp. 3025-3057 ◽  
Author(s):  
Cheng Chen ◽  
Wei Tian ◽  
Miaojie Yu
Keyword(s):  
Multinational Corporations ◽  
Empirical Support ◽  
Manufacturing Firms ◽  
Private Firms ◽  
Outward Fdi ◽  
Firm Level ◽  
Chinese Firm ◽  
Level Data ◽  
Production Strategies ◽  
Firm Level Data

Abstract We examine how domestic distortions affect firms’ production strategies abroad by documenting two puzzling findings using Chinese firm-level data of manufacturing firms. First, private multinational corporations (MNCs) are less productive than state-owned MNCs, but they are more productive than state-owned enterprises overall. Second, there are disproportionately fewer state-owned MNCs than private MNCs. We build a model to rationalise these findings by showing that discrimination against private firms domestically incentivises them to produce abroad. The model shows that selection reversal is more pronounced in industries with more severe discrimination against private firms, which receives empirical support.

Ageing and Employability. Evidence from Belgian Firm-Level Data

2012 ◽  
Author(s):  
Mariann Rigo ◽  
Vincent Vandenberghe ◽  
Fábio Waltenberg
Keyword(s):  
Firm Level ◽  
Level Data ◽  
Firm Level Data

scholarly journals Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France

2019 ◽  
Vol 11 (1) ◽  
pp. 38-63 ◽  
Author(s):  
Youssef Benzarti ◽  
Dorian Carloni
Keyword(s):  
Value Added ◽  
Consumption Tax ◽  
Difference In Differences ◽  
Firm Level ◽  
Employment Effects ◽  
Level Data ◽  
Price Effects ◽  
Firm Level Data ◽  
Material Goods ◽  
Firm Owners

This paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four groups: workers, firm owners, consumers, and suppliers of material goods. Using a difference-in-differences strategy on firm-level data, we find that: firm owners pocketed more than 55 percent of the VAT cut; consumers, sellers of material goods, and employees shared the remaining windfall with consumers benefiting the least; and the employment effects were limited. (JEL H22, H25, L83)

Sign in / Sign up

Export Citation Format

Share Document