Prof. Kalemli-Ozcan on Capital Allocation and Productivity
Prof. Kalemli-Ozcan's new research is featured in VOXEU. Joining a monetary union has been viewed so far from a single angle that countries give up independent monetary policy for exchange rate stability and this might be bad during a crisis since low growth countries cannot engineer competitive devaluations. Prof. Kalemli-Ozcan's research shows an alternative perspective on how joining the euro has impacted productivity in Europe. It turns out that capital wasn't allocated efficiently across firms after cheap borrowing at low interest rates, reducing total factor productivity.