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Dynamic Complementarities: A Quantitative Analysis

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  • Russell Cooper
  • Alok Johri

Abstract

This paper considers the importance of dynamic complementarities as an endogenous source of propagation in a dynamic stochastic economy. Dynamic complementarities link the stocks of human and organizational capital, which are influenced by past levels of economic activity, to current levels of productivity. We supplement an otherwise standard dynamic business cycle model with both contemporaneous and dynamic complementarities. The model is calibrated using estimates of these effects. Our quantitative analysis identifies empirically relevant dynamic complementarities as a source of propagation for both technology and taste shocks.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5691.

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Date of creation: Jul 1996
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Publication status: published as Cooper, Russel W. and Alok Johri. "Dynamic Complementarities: A Quantitative Analysis," Journal of Monetary Economics, 1997, v40(1,Sep), 97-119.
Handle: RePEc:nbr:nberwo:5691

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