Speaker：Hang Jing

Time：10AM,October 12nd,2020

Venue：EMS B224

Abstract：This paper develops a comparative framework for studying the macroeconomic costs of resource misallocation. The framework enables the assessment of the conditions under which the existing estimates in the misallocation literature, which are largely based on a value-added production structure and ignore inter-sectoral linkages, provide an unbiased estimate of a misallocation costs in relation to a more general setting, in which production of gross output relies upon input-output linkages across sectors. We show that in the absence of intermediate input distortions, the two approaches are isomorphic and will yield the same estimates of firms’ productivity and underlying distortions. When firm specific intermediate input distortions are present, however, the value-added model is incorrectly specified and will generally bias inference of firms’ productivity and distortions. Using Chinese and Indian manufacturing enterprise data, estimation based on the value-added and gross output models yields similar TFP gains from removing distortions for China, while the estimated TFP gain is significantly larger for India when the output model is used.

Introduction to the Speaker：Hang Jing, graduated from the University of California Los Angeles (UCLA) with a PhD in Economics in 2018 and worked at Lingnan College of Sun Yat-sen University. His research interest lies in understanding the role of resource mismatch and industrial structure transformation in economic development. Part of the research was published in "Economics Research, "Economics (Quarterly)" and other magazines.