Misallocation, Economic Growth, and Input-Output Economics
One of the most important developments in the growth literature of the last decade is the enhanced appreciation of the role that the misallocation of resources plays in helping us understand income differences across countries. Misallocation at the micro level typically reduces total factor productivity at the macro level. Quantifying these effects is leading growth researchers in new directions, two examples being the extensive use of firm-level data and the exploration of input-output tables, and promises to yield new insights on why some countries are so much richer than others.
Presented at the 10th World Congress of the Econometric Society in Shanghai, China. I am grateful to Antonio Ciccone, Bob Hall, John Fernald, and Pete Klenow for helpful comments and discussions. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
"Misallocation, Input-Output Economics, and Economic Growth" in D. Acemoglu, M. Arellano, and E. Dekel, Advances in Economics and Econometrics, Tenth World Congress, Volume II, Cambridge University Press, 2013.