Working Paper: NBER ID: w20856
Authors: Harold L. Cole; Jeremy Greenwood; Juan M. Sanchez
Abstract: What determines the technology that a country adopts? While many factors affect technological adoption, the efficiency of the country's financial system may also play a significant role. To address this question, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation. The ability of an intermediary to monitor and control the cash flows of a firm plays an important role in the technology adoption decision. Can such a theory help to explain the differences in total factor productivity and establishment-size distributions across India, Mexico, and the United States? A quantitative illustration suggests the answer is yes.
Keywords: No keywords provided
JEL Codes: D92; E13; G24; O11; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Efficiency of financial markets (G14) | Technology adoption (O33) |
| Technology adoption (O33) | Total Factor Productivity (TFP) (D24) |
| Technology adoption (O33) | Income levels (D31) |
| Efficiency of financial markets (G14) | Total Factor Productivity (TFP) (D24) |
| Efficiency of financial markets (G14) | Income levels (D31) |