Recent empirical studies document that the level of resource misallocation in the service sector is significantly higher than in the manufacturing sector. We quantify the importance of this difference and study its sources. Conservative estimates for Portugal (2008) show that closing this gap,...

We examine the effect of size-dependent policies in developing economies by focusing on a setof regulations that are applicable to firms with 20 or more formal employees in Peru. Firms canadjust to the regulations by (a) reducing their size, (b) shifting employment composition, or (c)splitting...

This paper examines the impact of highway expansion on aggregate productivity growth andsectoral reallocation between cities in China. To do so, I construct a unique dataset ofbilateral transportation costs between Chinese cities, digitized highway network maps, andfirm-level census. I first...

This paper studies a novel type of misallocation of credit between investments of varying liquidity. One type of investment is more liquid, i.e., its return is more pledgeable, and the other is more productive. Low liquidities of both investment types imply that the allocation of credit is...

Schemes of residual profit allocation (RPA) tax multinationals by allocating their 'routine' profits to countries in which their activities take place and sharing their remaining 'residual' profit across countries on some formulaic basis. They have recently and rapidly come to prominence in...

The legacy of non-performing loans and high opportunity cost of government financing ofbank recapitalization impeded the efficiency of financial intermediation and are an importantpolicy issue in Vietnam. This paper presents a theoretical and empirical analysis of the issue.An empirical analysis...

The paper discusses the case against a laissez faire approach to resource allocation and develops a model of supply bottlenecks. It argues that: (1) once budget constraints are hardened and credit markets begin to function appropriately, externalities associated with production bottlenecks and...