Pratap, Sangeeta; Urrutia, Carlos - In: Review of Economic Dynamics 15 (2012) 3, pp. 336-358
Financial crises in emerging economies are accompanied by a large fall in total factor productivity. We explore the role of financial frictions in exacerbating the misallocation of resources and explaining this drop in TFP. We build a two-sector model of a small open economy with a working...