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BEGIN:VEVENT
UID:0146a0b7f0da13d1639131a6520fc703
CATEGORIES:Seminars
CREATED:20181114T102855
SUMMARY:Liliana Varela - University of Warwick
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:\n\nIncome and Substitution Effects of Capital Inflows: A Firm-Level Analys
 is joint with Felipe Saffie and Kei-Mu Yi\n\n\nAbstract:\n \n \nThis paper 
 shows that capital inflows affect the reallocation of resources within and 
 across sectors and an economy's long-term outcomes through two forces. Firs
 t, capital inflows reduce the relative price of capital promoting industrie
 s with high capital elasticity, a substitution effect. Second, capital infl
 ows allow consumption smoothing and increase the demand of goods with high 
 income elasticity, an income effect. The strength of these two forces deter
 mines the direction of reallocation effects. We provide evidence for these 
 two forces using firm-level census data from the financial liberalization i
 n Hungary, a policy reform that led to capital inflows. We show that firms 
 in capital-intensive industries expand, as do firms in industries producing
  goods with high income elasticities. On the aggregate the income effect do
 minates and reallocates resources towards high income elasticity industries
 , as services. These findings motivate developing a dynamic, firm-level, mu
 lti-sector open economy model with varying capital intensities and non-homo
 thetic preferences. We calibrate the model and simulate a capital account l
 iberalization that occurs during the economy's transition to its steady-sta
 te. We find that the model can replicate our empirical results, and that th
 e long-run outcomes depend on the extent of the liberalization.  \n\n\n\n
DTSTAMP:20260403T183351Z
DTSTART:20190408T163000Z
DTEND:20190408T180000Z
SEQUENCE:0
TRANSP:OPAQUE
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