Total Factor Productivity Growth at the Firm-level: The Effects of Capital Account Liberalization
Xiang Li, Dan Su
Journal of International Economics,
forthcoming
Abstract
This study provides firm-level evidence on the effect of capital account liberalization on total factor productivity (TFP) growth. We find that a one standard deviation increase in the capital account openness indicator constructed by Fernández et al. (2016) is significantly associated with a 0.18 standard deviation increase in firms’ TFP growth rates. The productivity-enhancing effects are stronger for sectors with higher external finance dependence and capital-skill complementarity, and are persistent five years after liberalization. Moreover, we show that potential transmission mechanisms include improved financing conditions, greater skilled labor utilization, and technology upgrades. Finally, we document heterogeneous effects across firm size and tradability, and threshold effects with respect to the country's institutional quality.
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12.03.2024 • 8/2024
Risk in the banking sector: four out of ten top supervisors come from the financial industry
Europe's banks realise excess returns on the stock market when their alumni join the boards of national supervisory authorities. A study by the Halle Institute for Economic Research (IWH) shows that this happens more frequently than previously recognised. The findings indicate a risk to financial stability and call for a more merit-based, transparent appointment of senior regulators.
Michael Koetter
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07.09.2023 • 23/2023
The German economy continues its downturn
High inflation, increased interest rates, weak foreign demand and uncertainty among private households and firms are currently weighing on the German economy. In its autumn forecast, the Halle Institute for Economic Research (IWH) expects gross domestic product (GDP) to decline by 0.5% in 2023 and to increase by 0.9% in 2024.
Oliver Holtemöller
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