A quantitative framework of firm dynamics is developed where the size of the informal sector is determined by financial constraints and the burden of taxation. Improving access to credit for formal sector firms increases aggregate TFP and output while reducing the size of the informal sector....

A quantitative framework of firm dynamics is developed where the size of the informal sector is determined by financial constraints and the burden of taxation. Improving access to credit for formal sector firms increases aggregate TFP and output while reducing the size of the informal sector....

In an empirical investigation of the interactions between industrial structure and macro outcomes, an accounting framework was applied to relate changes in sectoral employment and output compositions to changes in overall productivity growth over time. The numerical results were interpreted...