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TFPR: Dispersion and Cyclicality

Author

Listed:
  • Russell Cooper
  • Ozgen Ozturk

Abstract

This paper studies the dispersion and cyclicality of TFPR. Recent business cycle models assume countercyclical dispersion in TFPQ based on evidence of countercyclical dispersion in TFPR, though TFPR reflects endogenous prices. An overlapping generations model with monopolistic competition and state-dependent pricing is constructed to match three key data patterns: (i) countercyclical dispersion of TFPR, (ii) countercyclical dispersion of price changes, and (iii) countercyclical frequency of price adjustment. These patterns are matched either if shocks to the dispersion of TFPQ are negatively correlated with the mean of TFPQ, or if the monetary authority responds to them by "leaning against the wind."

Suggested Citation

  • Russell Cooper & Ozgen Ozturk, 2026. "TFPR: Dispersion and Cyclicality," American Economic Journal: Macroeconomics, American Economic Association, vol. 18(3), pages 265-303, July.
    • Handle: RePEc:aea:aejmac:v:18:y:2026:i:3:p:265-303
    DOI: 10.1257/mac.20220264
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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