Scarring recessions and credit constraints : evidence from Colombian firm dynamics
Using a rich dataset of Colombian manufacturing establishments, we illustrate scarring effects of recessions operating through inefficient exit induced by heterogeneous credit constraints. We show that financially constrained businesses may be forced to exit the market during recessions even if they...
- Autores:
-
Eslava Mejía, Marcela
Galindo Andrade, Arturo José
Hofstetter Gascón, Marc
Izquierdo, Alejandro
- Tipo de recurso:
- Work document
- Fecha de publicación:
- 2010
- Institución:
- Universidad de los Andes
- Repositorio:
- Séneca: repositorio Uniandes
- Idioma:
- eng
- OAI Identifier:
- oai:repositorio.uniandes.edu.co:1992/8205
- Acceso en línea:
- http://hdl.handle.net/1992/8205
- Palabra clave:
- Plant exit
Credit constraints
Business cycles
Recessions
Ciclos económicos
Recesiones
G14, E 32, L25, O4
- Rights
- openAccess
- License
- http://creativecommons.org/licenses/by-nc-nd/4.0/
| Summary: | Using a rich dataset of Colombian manufacturing establishments, we illustrate scarring effects of recessions operating through inefficient exit induced by heterogeneous credit constraints. We show that financially constrained businesses may be forced to exit the market during recessions even if they are more productive than surviving unconstrained counterparts: an unconstrained plant with TFP at the lowest 10th percentile faces the same estimated exit probability as a constrained plant with TFP at the 79th percentile. If credit constraints affect 1/3 of businesses, we estimate aggregate TFP losses of 1.2 log points after a four year long recession. |
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