We build a partial equilibrium model of firm dynamics under exchange rate uncertainty. Firms face idiosyncratic productivity shocks and observe the current level of the real exchange rate each period. Given their current level of capital stock, firms make their export decisions and choose how...

We study the relation between misallocation of resources, TFP and credit conditions using sectoral data from Mexican manufacturing industries between 2003 and 2010. We use a theory-based framework to account for TFP changes in the Mexican manufacturing sector due to changes in distortions in the...

We study the relation between credit conditions, misallocation of resources, and total factor productivity (TFP) using sectoral data from Mexican manufacturing industries between 2003 and 2010. Our analysis uses a theory-based framework to account for TFP changes in the Mexican manufacturing...

We build a partial equilibrium model of firm dynamics under exchange rate uncertainty. Firms face idiosyncratic productivity shocks and observe the current level of the real exchange rate each period. Given their current level of capital stock, firms make their export decisions and choose how...

We build a partial equilibrium model of firm dynamics under exchange rate uncertainty. Firms face idiosyncratic productivity shocks and observe the current level of the real exchange rate each period. Given their current level of capital stock, firms make their export decisions and choose how...

The financial crises or “sudden stops” of the last decade in emerging economies were accompanied by a large fall in total factor productivity. In this paper we explore the role of financial frictions in exacerbating the misallocation of resources and explaining this drop in TFP. We build a...

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...

1989 to 2000, and analyze the effect of the 1994 crisis modeled as an unexpected increase in the risk free rate. The model predicts: (i) a real exchange rate depreciation, (ii) an increase in the debt burden, (ii) a drop in output, (iii) a large decline in investment, (iv) an increase in...