Advanced Search
MyIDEAS: Login to save this paper or follow this series

Job reallocation, idiosyncratic shocks and aggregate fluctuations


Author Info

  • Gautier, Pieter

    (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)


This paper shows how idiosyncratic shocks, macro-economic complementarities and a reallocation timing effect, can lead to multiple cyclical output equilibria. When reallocating labor from low productivity plants to high productivity plants takes time and effort which cannot be used for normal production, the best time for an individual firm to reallocate labor is in a recession when demand is low anyway. In the presence of complementarities and positive spillovers, a negative demand shock for one firm will give this firm an incentive to reallocate, but because reallocation itself also leads to lower output this will decrease the demand for the goods of other firms. Therefore those other firms will have an incentive to reallocate as well. After the reallocation process is finished, output will increase again.

Download Info

If 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.
File URL:
Our checks indicate that this address may not be valid because: 500 Failed to connect to FTP server Net::FTP: Bad hostname ''. If this is indeed the case, please notify (R. Dam)
Download Restriction: no

Bibliographic Info

Paper provided by VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics in its series Serie Research Memoranda with number 0032.

as in new window
Date of creation: 1996
Date of revision:
Handle: RePEc:dgr:vuarem:1996-32

Contact details of provider:
Web page:

Related research

Keywords: Business cycle; Coordination failures; Reallocation;

Other versions of this item:

Find related papers by JEL classification:


No references listed on IDEAS
You can help add them by filling out this form.



This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:dgr:vuarem:1996-32. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (R. Dam).

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.