Francisco Parro

Local supplier rescue and relayable liquidity

This article develops a model of sequential supplier rescue in rooted supply trees. An active customer can meet a direct supplier’s fixed activation requirement, but relationship-specific support cannot finance more remote suppliers. Activation instead releases the supplier’s own...

Optimal Public Sector Premium, Talent Misallocation, and Aggregate Productivity: Evidence From Egypt

ABSTRACT We develop a tractable general equilibrium model to quantify the long‐run aggregate productivity gains from adjusting the public‐sector premium and the size of the public sector to their productivity‐maximizing levels. The model incorporates an endogenous choice between...