NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Victor Zhorin

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Working Papers

November 2013Financial Obstacles and Inter-Regional Flow of Funds
with Benjamin Moll, Robert M. Townsend: w19618
Motivated by evidence from the micro data that the type of financial frictions faced by individuals varies across regions within countries, we develop a general equilibrium framework that encompasses different micro financial underpinnings. We use it to compare the implications of two concrete frictions, limited commitment and moral hazard, and argue that these have potentially very different implications at both the macro and the micro level. Aggregate productivity is depressed in the two regimes but for completely different reasons: under limited commitment capital is misallocated across heterogeneous firms. In contrast, under moral hazard, productivity is endogenously lower at the firm level because entrepreneurs exert suboptimal effort. Occupational choice, productivity and firm size d...

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