The "Fundamental Transformation" in Macroeconomics
AbstractWhen factors enter into joint-production, they typically develop a degree of specificity with respect to each other. It is well known that, when combined with contracting difficulties, specificity gives rise to a Williamsonian 'Fundamental Transformation' from an ex-ante competitive relationship to an ex-post bilateral monopoly. The macroeconomic consequences of widespread specificity are far-reaching. Specificity results in misallocation, underutilization, and unemployment of the economy's productive factors; it hampers growth by depressing the incentives to replace what is outdated and to fully utilize the economy's resources; it disrupts macroeconomic adjustment by inducing a wedge between timid creation and excessive destruction of the old system; and it exacerbates downturns by `elastifying' the cyclical response of inelastic factors.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 86 (1996)
Issue (Month): 2 (May)
Other versions of this item:
- Ricardo J. Caballero & Mohamad L. Hammour, 1996. "The "Fundamental Transformation" in Macroeconomics," NBER Working Papers 5471, National Bureau of Economic Research, Inc.
- E00 - Macroeconomics and Monetary Economics - - General - - - General
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Myerson, Roger B. & Satterthwaite, Mark A., 1983.
"Efficient mechanisms for bilateral trading,"
Journal of Economic Theory,
Elsevier, vol. 29(2), pages 265-281, April.
- Hall, Robert E & Lazear, Edward P, 1984.
"The Excess Sensitivity of Layoffs and Quits to Demand,"
Journal of Labor Economics,
University of Chicago Press, vol. 2(2), pages 233-57, April.
- Robert E. Hall & Edward P. Lazear, 1984. "The Excess Sensitivity of Layoffs and Quits to Demand," NBER Working Papers 0864, National Bureau of Economic Research, Inc.
- Ricardo J. Caballero & Mohamad L. Hammour, 1995.
"On the Ills of Adjustment,"
95-21, Massachusetts Institute of Technology (MIT), Department of Economics.
- Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
- Ricardo J. Caballero & Mohamad L. Hammour, 1991.
"The Cleansing Effect of Recessions,"
NBER Working Papers
3922, National Bureau of Economic Research, Inc.
- Tse, Chung Yi, 2000. "Monopoly, human capital accumulation and development," Journal of Development Economics, Elsevier, vol. 61(1), pages 137-174, February.
- Claudio Michelacci, 2003. "Low Returns in R&D Due to the Lack of Entrepreneurial Skills," Economic Journal, Royal Economic Society, vol. 113(484), pages 207-225, January.
- Olivier Blanchard & Augustin Landier, 2001.
"The Perverse Effects of Partial Labor Market Reform: Fixed Duration Contracts in France,"
NBER Working Papers
8219, National Bureau of Economic Research, Inc.
- Blanchard, Olivier Jean & Landier, Augustin, 2002. "The Perverse Effects of Partial Labor Market Reform: Fixed Duration Contracts in France," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
- André Kurmann & Nicolas Petrosky-Nadeau, 2007.
"Search Frictions in Physical Capital Markets as a Propagation Mechanism,"
Cahiers de recherche
- Andre Kurmann & Nicolas Petrosky-Nadeau, 2006. "Credit Market Frictions with Costly Capital Reallocation as a Propagation Mechanism," 2006 Meeting Papers 365, Society for Economic Dynamics.
- Scholz, Christian M., 1997. "Environmental tax reform with irreversible investment, technological progress and unemployment," Kiel Working Papers 798, Kiel Institute for the World Economy.
- O Blanchard & A Landier, 2002. "The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France," Economic Journal, Royal Economic Society, vol. 112(480), pages F214-F244, June.
- Maciej K. Dudek & Ã³wna Handlowa, 2006. "On Artificial Structural Unemployment," Computing in Economics and Finance 2006 171, Society for Computational Economics.
- Robert E. Hall, 1999. "Aggregate Job Destruction and Inventory Liquidation," NBER Working Papers 6912, National Bureau of Economic Research, Inc.
- Gert-Jan Linders, 2004. "The Effect of Domestic Institutions on International Trade Flows: A sectoral analysis," ERSA conference papers ersa04p357, European Regional Science Association.
- Jaap W.B. Bos & P.C. van Santen & P. Schilp, 2009. "Reallocating Profits in Restructuring Industries: Evidence from European and US Banking," Working Papers 09-12, Utrecht School of Economics.
- Gert Wagner, 2005. "Un Siglo de TributaciÃ³n Minera en Chile: 1880-1980," Documentos de Trabajo 288, Instituto de Economia. Pontificia Universidad Católica de Chile..
- Michelacci, Claudio, 2002. "Low Returns in R&D Due to Lack of Entrepreneurial Skills," CEPR Discussion Papers 3179, C.E.P.R. Discussion Papers.
- Oscar Landerretche Moreno, 2007. "Creation and Destruction: Evidence from an Emerging Market," Working Papers wp246, University of Chile, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.