Financial Shocks, Productivity and Prices
10 Jun 2025
13:00 -14:15
Times are shown in local time.
Open to: All
Room W4.05 (Cambridge Judge Business School)
Trumpington St
Cambridge
CB2 1AG
United Kingdom
Join our Finance seminar
Speaker: Professor Simone Lenzu, NYU Stern School of Business
About the seminar topic
We study the interconnection between the productivity and pricing effects of financial shocks. Combining administrative records on firm-level output prices and quantities with quasi-experimental variation in credit supply, we show that a tightening of credit conditions has a persistent, yet delayed, negative effect on firms’ long-run physical productivity growth (TFPQ) but also induces firms to change their pricing policies.
As a result, commonly used revenue-based productivity measures (TFPR) – which conflate the pricing and productivity effects – offer biased predictions regarding the consequences of financial shocks for firms’ productivity growth, underestimating the long-run elasticity of physical productivity to credit supply by almost half.
Moreover, we show that the pricing adjustments themselves also have productivity implications. Firms coping with a contraction of credit use low pricing as a source of internal financing, allowing them to avoid cutting expenditures on productivity-enhancing activities, thereby softening the impact of financial shocks on long-run productivity growth.
Speaker bio
Simone Lenzu is an Assistant Professor of Finance at NYU Stern. His research is in the areas of financial intermediation, corporate finance, applied macro, productivity, and spatial economics, using rich micro-level data and quantitative modelling approaches.
Recent works focus on understanding how market frictions, both financial and real, affect firms’ decisions, and ultimately their implications for aggregate outcomes and the spatial distribution of economic activity.
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No registration required. If you have any questions about this seminar, please email the Finance Subject Group Administrator.