Credit Supply and Productivity Growth [Job Market Paper] (Slides)
with F. Manaresi
We study the impact of bank credit supply on firm output and productivity. Exploiting a matched firm-bank database, covering all credit relationships of Italian corporations over more than a decade, we measure idiosyncratic supply-side shocks to firm credit availability. With this, we estimate a production model augmented with financial frictions, and show that an expansion of credit supply leads firms to increase both their inputs and value added and revenues for a given level of inputs. Our estimates imply that a credit crunch will be followed by a productivity slowdown, as experienced by most OECD countries after the Great Recession. Quantitatively, the credit contraction between 2007 and 2009 can account for about a quarter of the observed decline in Italian total factor productivity growth. Results are robust to an alternative measure of credit supply shock that uses the 2007-2008 interbank market freeze as a natural experiment to control for assortative matching between borrowers and lenders. Finally, we investigate possible channels: access to credit fosters IT-adoption, innovation, exporting, and adoption of superior management practices.
Work in Progress
Management practices and Stock Market Returns
with N. Bloom, B. Lucking, S. Ohlmacher, and S. Otero
We study the correlation between the adoption of superior management practices and stock returns. Firms receiving higher score in the World Management Survey (WMS) experience higher stock returns in the trading days following the interview. We rationalize this finding with a model where market participants receive noisy signals about firm fundamentals and continuously update their beliefs about firm quality. WMS data contain insider information which is unknown to the market and, therefore, still unpriced. As traders learn about firm quality, stock prices of better managed companies increase.
Healthcare exceptionalism in a non-market system: hospital performance, labor supply, and allocation in Denmark
with A. Helsø and A. Wang
Good healthcare should mitigate the effects of negative health shocks on individuals' earnings and labor supply. Consequently, better hospitals are the ones that, ceteris paribus, allow patients to experience smaller drop in their labor supply and income after a disease or a trauma. Following this intuition, we use a dataset covering the labor market outcomes of all Danes and the universe of their interaction with the public healthcare system over more than a decade, to estimate a novel measure of hospital (and hospital department) quality. We then use our measure of Danish hospital quality to study dynamic allocation, namely whether better hospitals grow more over time, in the non-market healthcare system in Denmark. Our work is related with Chandra et al (AER, 2016) which shows that market forces in US healthcare sector operate similarly to other industries, but our analysis tests for dynamic allocation in the absence of ``market forces’’.
A Rising Tide Lifts All Boats? IT growth in the US over the last 30 years
with N. Bloom
Using a new survey of IT usage from 1987 to 2014 we establish some stylized facts about the adoption of Information Technology. First, this has been a gradual process with a steady increase of our key measure of PCs per employee since 1987, rather than a sudden burst from the mid-1990s to the mid-2000s as implied by the timing of the IT productivity miracle. Second, this increase in IT intensity has occurred across all US firms rather than being concentrated in certain high-tech firms. In particular, the 25th, 50th and 75th percentiles of firm-level IT intensity have increase at about the same rate across firms over this period. Third, this increase in IT intensity has also been reasonably balanced geographically. While California and the East Coast has a higher level of IT intensity, all areas of the country have seen similar trends in the growth of IT intensity. Four, the two major drivers of IT intensity appear to be education – in particular the share of employees in a geography with a college degree – and industry. As such, the continued increase in the education levels of US workers will naturally lead to an upward drift in IT intensity over and above that generated by technological advance.