Every Cloud Has a Silver Lining: Cleansing Effects of the Portuguese Financial Crisis

57 Pages Posted: 25 Jul 2019 Last revised: 29 Apr 2020

See all articles by Daniel A. Dias

Daniel A. Dias

Board of Governors of the Federal Reserve System

Carlos Robalo Marques

Bank of Portugal - Economic Research Department

Carlos Marques

affiliation not provided to SSRN

Date Written: June, 2019

Abstract

Using firm-level data, this paper shows that the Portuguese financial crisis was a period of intensified productivity-enhancing reallocation. Aggregate productivity gains, both in manufacturing and services, came from relatively higher contributions of entering and exiting firms and from reallocation of resources between surviving firms. At the microlevel, the crisis reduced the probability of survival for high- and low-productivity firms, but it hit low-productivity firms disproportionately harder. We also found important heterogeneous effects across economic sectors regarding input reallocation that underline the importance of using data for the entire economy whenever similar studies are conducted.

JEL Classification: D24, E32, L25, O47

Suggested Citation

Dias, Daniel A. and Robalo Marques, Carlos and Marques, Carlos, Every Cloud Has a Silver Lining: Cleansing Effects of the Portuguese Financial Crisis (June, 2019). International Finance Discussion Paper No. 1250, Available at SSRN: https://ssrn.com/abstract=3423257 or http://dx.doi.org/10.17016/IFDP.2019.1250

Daniel A. Dias (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Carlos Robalo Marques

Bank of Portugal - Economic Research Department ( email )

R. do Ouro, 27
Lisboa, 1100-150
Portugal

Carlos Marques

affiliation not provided to SSRN

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