Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/125547 
Authors: 
Year of Publication: 
2015
Series/Report no.: 
Working Paper No. 724
Publisher: 
University of California, Economics Department, Santa Cruz, CA
Abstract: 
I develop a method to measure and separate the production misallocation caused by failures in factor markets versus financial markets. When I apply the method to rice farming villages in Thailand I find surprisingly little misallocation. Optimal reallocation would increase output in most villages by less than 15 percent. By 2006 most misallocation comes from factor market failures. I derive a decomposition of aggregate growth that accounts for misallocation. Declining misallocation contributes little to growth compared to factor accumulation and rising farm productivity. I use a government credit intervention to test my measures. I confirm that credit causes a statistically significant decrease in only financial market misallocation.
Subjects: 
misallocation
market failure
Thailand
agriculture
financial markets
factor markets
JEL: 
O47
O16
E13
Document Type: 
Working Paper

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