Professor Abhijit Banerjee’s lectures will aim to provide an introduction to the large and fast-growing literature on misallocation of resources and its role in lowering aggregate productivity. They will start from a theoretical framework which embeds ideas about misallocation into a growth model, then go into evidence about the magnitude of misallocation in developing countries and its consequence for aggregate outcomes and finally return to the question of how to model growth in the presence of market imperfections that lead to misallocation.
Those who wish to make themselves familiar with the context of the lectures may refer to the following resources.
Banerjee, Abhijit and Esther Duflo, "Growth theory through the Lens of Development Economics," in Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 3, chapter 1, Elsevier.
Caselli, Francesco, "Accounting for Cross-Country Income Differences," in Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, Elsevier.
Banerjee, Abhijit, and Esther Duflo. "Do Firms Want to Borrow More? Testing Credit Constraints Using a Directed Lending Program," Review of Economic Studies, 2014.
Hsieh, Chang-Tai and Peter Klenow, (2007) "Misallocation and Manufacturing TFP in China and India," mimeo, Stanford University.
Banerjee, Abhijit and Ben Moll, "Why Does Misallocation Persist?," American Economic Journal: Macroeconomics, 2010, vol. 2, no. 1, pp. 189-206.
Moll, Benjamin, "Productivity Losses from Financial Frictions: Can Self-Financing Undo Capital Misallocation?", mimeo, University of Chicago, 2009.
Banerjee, A.V. and A. Newman, "Information, the Dual economy and Development," Review of Economic Studies, 65 (4), 1998.
Bryan, G., S. Chowdhury and A. M. Mobarak. "Under-Investment in a Profitable Technology: The Case of Seasonal Migration in Bangladesh," Econometrica, September 2014.