Slow recoveries

Raphael Bergoeing, Norman Loayza, Andrea Repetto

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


Economies respond differently to aggregate shocks that reduce output. While some countries rapidly recover their pre-crisis trend, others stagnate. Recent studies provide empirical support for a link between aggregate growth and plant dynamics through its effect on productivity: the entry and exit of firms and the reallocation of resources from less to more efficient firms explain a relevant part of transitional productivity dynamics. In this paper, we use a stochastic general equilibrium model with heterogeneous firms to study the effect on aggregate short-run growth of policies that distort the process of birth, growth, and death of firms, as well as the reallocation of resources across economic units. Our findings show that indeed policies that alter plant dynamics can explain slow recoveries. We also find that output losses associated to delayed recoveries are large.

Original languageEnglish
Pages (from-to)473-506
Number of pages34
JournalJournal of Development Economics
Issue number2 SPEC. ISS.
StatePublished - Dec 2004


  • General equilibrium
  • Plant dynamics
  • Policy
  • Productivity growth


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