TY  - JOUR
AU  - Restuccia,Diego
AU  - Rogerson,Richard
TI  - Policy Distortions and Aggregate Productivity with Heterogeneous Plants
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13018
PY  - 2007
Y2  - April 2007
UR  - http://www.nber.org/papers/w13018
L1  - http://www.nber.org/papers/w13018.pdf
N1  - Author contact info:
Diego Restuccia
Finance Department
The Wharton School
University of Pennsylvania
3620 Locust Walk
Philadelphia, PA 19104-6367
USA
Tel: 215-898-7617
E-Mail: diego.restuccia@utoronto.ca

Richard Rogerson
Woodrow Wilson School of
Public and International Affairs
323 Bendheim Hall
Princeton University
Princeton, NJ 08544
Tel: 609-258-4839
Fax: 609-258-5349
E-Mail: rdr@princeton.edu
AB  - We formulate a version of the growth model in which production is carried out by heterogeneous plants and calibrate it to US data. In the context of this model we argue that differences in the allocation of resources across heterogeneous plants may be an important factor in accounting for cross-country differences in output per capita. In particular, we show that policies which create heterogeneity in the prices faced by individual producers can lead to sizeable decreases in output and measured TFP in the range of 30 to 50 percent. We show that these effects can result from policies that do not rely on aggregate capital accumulation or aggregate relative price differences. More generally, the model can be used to generate differences in capital accumulation, relative prices, and measured TFP.
ER  -