American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Distortions, Producer Dynamics, and Aggregate Productivity: A General Equilibrium Analysis
American Economic Journal: Macroeconomics
(pp. 134–62)
Abstract
In less developed economies, the allocation of factor inputs to more productive farms is often hindered. To analyze how distortions affect farm dynamics and agricultural productivity, we develop a model of heterogeneous farms investing in productivity improvements. We calibrate the model using detailed farm-level panel data from Vietnam, exploiting regional differences in agricultural institutions. We focus on southern Vietnam and quantify the effect of higher measured distortions in the north. We find that the higher distortions in the north reduce agricultural productivity by 38 percent, accounting for 55 percent of the observed 2.5-fold difference between regions.Citation
Ayerst, Stephen, Loren Brandt, and Diego Restuccia. 2026. "Distortions, Producer Dynamics, and Aggregate Productivity: A General Equilibrium Analysis." American Economic Journal: Macroeconomics 18 (4): 134–62. DOI: 10.1257/mac.20240526Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- O11 Macroeconomic Analyses of Economic Development
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- P25 Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics
- P32 Collectives; Communes; Agriculture
- Q12 Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets