02511cas a2200265 a 4500 AALejournalIMF017654 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484300701 1018-5941 BD-DhAAL BD-DhAAL Duval, Romain. Financial Frictions and the Great Productivity Slowdown / Romain Duval, Gee Hee Hong, Yannick Timmer. Washington, D.C. : International Monetary Fund, 2017. 1 online resource (32 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We study the role of financial frictions in explaining the sharp and persistent productivity growth slowdown in advanced economies after the 2008 global financial crisis. Using a rich cross-country, firm-level data set and exploiting quasi-experimental variation in firm-level exposure to the crisis, we find that the combination of pre-existing firm-level financial fragilities and tightening credit conditions made an important contribution to the post-crisis productivity slowdown. Specifically: (i) firms that entered the crisis with weaker balance sheets experienced decline in total factor productivity growth relative to their less vulnerable counterparts after the crisis; (ii) this decline was larger for firms located in countries where credit conditions tightened more; (iii) financially fragile firms cut back on intangible capital investment compared to more resilient firms, which is one plausible way through which financial frictions undermined productivity. All of these effects are highly persistent and quantitatively large-possibly accounting on average for about a third of the post-crisis slowdown in within-firm total factor productivity growth. Furthermore, our results are not driven by more vulnerable firms being less productive or having experienced slower productivity growth before the crisis, or differing from less vulnerable firms along other dimensions. Mode of access: Internet Hong, Gee Hee. Timmer, Yannick. IMF Working Papers; Working Paper ; No. 2017/129 Full text available on IMF http://elibrary.imf.org/view/journals/001/2017/129/001.2017.issue-129-en.xml IMF e-Library