Aggregate dynamics in lumpy Economies

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• dc.contributor.author Baley, Isaac
• dc.contributor.author Blanco, Andrés
• dc.date.accessioned 2022-05-23T09:55:18Z
• dc.date.available 2022-05-23T09:55:18Z
• dc.date.issued 2021
• dc.description.abstract How does an economy’s capital respond to aggregate productivity shocks when firms make lumpy investments? We show that capital’s transitional dynamics are structurally linked to two steady-state moments: the dispersion of capital to productivity ratios—an indicator of capital misallocation—and the covariance of capital to productivity ratios with the time elapsed since their last adjustment—an indicator of asymmetric costs of upsizing and downsizing the capital stock. We compute these two sufficient statistics using data on the size and frequency of investment of Chilean plants. The empirical values indicate significant effects of aggregate productivity shocks and favor investment models with a strong downsizing rigidity and random opportunities for free adjustments.
• dc.description.sponsorship Baley acknowledges the support of the Spanish Ministry of the Economy and Competitiveness, through a Seed Grant from the Barcelona Graduate School of Economics Severo Ochoa Programme for Centres of Excellence in R&D (SEV-2015-0563). This research was funded in part by the Michigan Institute for Teaching and Research in Economics.
• dc.format.mimetype application/pdf
• dc.identifier.citation Baley I, Blanco A. Aggregate dynamics in lumpy Economies. Econometrica. 2021 May;89(3):1235-64. DOI: 10.3982/ECTA17344
• dc.identifier.doi http://dx.doi.org/10.3982/ECTA17344
• dc.identifier.issn 0012-9682
• dc.identifier.uri http://hdl.handle.net/10230/53204
• dc.language.iso eng
• dc.publisher Wiley
• dc.relation.ispartof Econometrica. 2021 May;89(3):1235-64
• dc.relation.projectID info:eu-repo/grantAgreement/ES/1PE/SEV-2015-0563
• dc.rights © 2021 The Authors. Econometrica published by John Wiley & Sons Ltd on behalf of The Econometric Society. Isaac Baley is the corresponding author on this paper. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License (https://creativecommons.org/licenses/by-nc-nd/4.0/), which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/4.0/
• dc.subject.keyword Inaction
• dc.subject.keyword Lumpiness
• dc.subject.keyword Transitional dynamics
• dc.subject.keyword Sufficient statistics
• dc.subject.keyword Non-convex adjustment costs
• dc.subject.keyword Investment
• dc.subject.keyword State-dependence
• dc.subject.keyword Time-dependence
• dc.title Aggregate dynamics in lumpy Economies
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/publishedVersion