Misallocation: Theory and Measurement – Minicourse

Instructor: Baris Kaymak, Associate Professor, University of Montreal, Canada

Schedule: Monday March 11th and Wednesday March 13th, 9:00 – 12:00. Room to be announced.

Sing up press here 

Course description

Allocation of resources is critical for achieving high productivity in real economies. This course presents recent theoretical and empirical research in the area.

For graduate students a preparation shouldn’t be necessary as the course is designed to be accessible for someone who hears the word misallocation for the first time, but If anyone is would like to read ahead, I’d recommend the Restuccia and Rogerson (2017, Journal of Economic Perspectives). It’s a broad and accessible review of the literature. Another good paper to read, with some math involved is Hopenhayn’s 2014 review. That one is specific to the Hopenhayn model of industry dynamics. The rest may be a bit less accessible to students. I would recommend they read them after the mini-course. They will have a better understanding that way. If anyone really wants to read more, the seminal references are Hsieh and Klenow (2009) and Restuccia and Rogerson (2013).

A list of papers reviewed are:

• Hopenhayn, Hugo A. “Firms, misallocation, and aggregate productivity: A review.” Annu. Rev. Econ. 6, no. 1 (2014): 735-770.
• Restuccia, Diego, and Richard Rogerson. “The causes and costs of misallocation.” Journal of Economic Perspectives 31, no. 3 (2017): 151-74.
• Restuccia, Diego, and Richard Rogerson. “Misallocation and productivity.” (2013): 1-10.

• Adamopoulos, Tasso, and Diego Restuccia. “The size distribution of farms and international productivity differences.” American Economic Review 104, no. 6 (2014): 1667-97.

• Hsieh, Chang-Tai, and Peter J. Klenow. “Misallocation and manufacturing TFP in China and India.” The Quarterly journal of economics 124, no. 4 (2009): 1403-1448.

• Bils, Mark, Peter J. Klenow, and Cian Ruane. “Misallocation or Mismeasurement?(Incomplete/Under Construction).” (2018). http://www.klenow.com/misallocation-mismeasurement-paper.pdf

• Midrigan, Virgiliu, and Daniel Yi Xu. “Finance and misallocation: Evidence from plant-level data.” American economic review 104, no. 2 (2014): 422-58.

• David, Joel M., Hugo A. Hopenhayn, and Venky Venkateswaran. “Information, misallocation, and aggregate productivity.” The Quarterly Journal of Economics 131, no. 2 (2016): 943-1005.

• David, Joel M., and Venky Venkateswaran. The sources of capital misallocation. No. w23129. National Bureau of Economic Research, 2017.

• David, Joel, Lukas Schmid, and David Zeke. “Risk-adjusted capital allocation and misallocation.” Available at SSRN 3255111 (2018).

• Kaymak, Barıs, and Immo Schott. “Loss-Offset Provisions in the Corporate Tax Code and Misallocation of Capital.” (2018).

• Kaymak, Barıs, and Immo Schott. “Tax Heterogeneity and Misallocation.” (2019), mimeo.