Distortions, Producer Dynamics, and Aggregate Productivity: A General Equilibrium Analysis

Thu, 01 Jan 2026 00:00:00 +0000

This paper asks how institutional distortions to factor markets affect not only the static allocation of inputs across farms but also the dynamic choices — crop selection and productivity-enhancing investment — that determine the long-run distribution of farm productivities and hence aggregate agricultural TFP. The question matters because prior work on misallocation has largely treated the productivity distribution as exogenous; this paper endogenizes it, showing that the dynamic channels can be quantitatively larger than the static factor-misallocation channel.

Stephen Ayerst | Macro Paper Warehouse

Distortions, Producer Dynamics, and Aggregate Productivity: A General Equilibrium Analysis