Capital Allocative Disturbances and Economic Fluctuations
AbstractPermanent sector-specific productivity shocks alter the relative marginal products of capital and labor across sectors, such that the existing factor allocations are suboptimal. The subsequent factor reallocations may involve the costly movement and redeployment of capital and labor across sectors. To proxy the magnitude of these disturbances, this paper focuses on capital, rather than labor, allocative disturbances, since firms can make temporary adjustments in employment levels in response to transitory sectoral shocks. Empirical evidence is provided that these costs reduce output from what it otherwise would have been and that this effect persists for up to three quarters. Copyright 1993 by MIT Press.
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Bibliographic InfoArticle provided by MIT Press in its journal Review of Economics & Statistics.
Volume (Year): 75 (1993)
Issue (Month): 2 (May)
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- Prakash Loungani & Bharat Trehan, 1997. "Explaining unemployment: sectoral vs aggregate shocks," Economic Review, Federal Reserve Bank of San Francisco, pages 3-15.
- Chen, Jinzhu & Kannan, Prakash & Loungani, Prakash & Trehan, Bharat, 2012.
"New evidence on cyclical and structural sources of unemployment,"
Federal Reserve Bank of San Francisco, issue March, pages 1-23.
- Zinzhu Chen & Prakash Kannan & Prakash Loungani & Bharat Trehan, 2011. "New evidence on cyclical and structural sources of unemployment," Working Paper Series 2011-17, Federal Reserve Bank of San Francisco.
- Jinzhu Chen & Bharat Trehan & Prakash Kannan & Prakash Loungani, 2011. "New Evidence on Cyclical and Structural Sources of Unemployment," IMF Working Papers 11/106, International Monetary Fund.
- Paul Blackley, 2000. "The impact of sectoral shifts in investment on unemployment in U.S. labor markets," Atlantic Economic Journal, International Atlantic Economic Society, vol. 28(4), pages 435-449, December.
- Hesna Genay & Prakash Loungani, 1997. "Labor market fluctuations in Japan and the U.S.--how similar are they?," Economic Perspectives, Federal Reserve Bank of Chicago, issue May, pages 15-28.
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