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...

The literature has come to no agreement about the empirical validity of the so-called weak government hypothesis. According to this hypothesis, political fragmentation should lead to higher government expenditure. With the aim of reconciling the empirical evidence with theory, in this paper we...

Customs face a difficult tradeoff between, on one side, collecting tariff revenues and preventing smuggling, and on the other side, avoiding creating additional barriers to trade. They also tend to concentrate discretionary power in the hands of officials whose decisions can bear high costs for...

Following the seminal work of Hsieh and Klenow (2014), there is growing consensus that a key difference between the U.S. and developing economies is that the latter exhibit slower employment growth over the life cycle of the average productive establishment. At the same time, the distribution of...