Capital misallocation and secular stagnation

Andrea Caggese and Ander Pérez-Orive

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: The widespread emergence of intangible technologies in recent decades may have significantly hurt output growth–even when these technologies replaced considerably less productive tangible technologies–because of low interest rates. After a shift toward intangible capital in production, the corporate sector becomes a net saver because intangible capital has a low collateral value. Firms’ ability to purchase intangible capital is impaired by low interest rates because low rates slow down the accumulation of savings and increase the price of capital, worsening capital misallocation. Our model simulations reproduce key trends in the U.S. in the period from 1980 to 2015.

Keywords: Intangible capital; borrowing constraints; capital reallocation; secular stagnation (search for similar items in EconPapers)
JEL-codes: E22 E43 E44 (search for similar items in EconPapers)
Date: 2018-07, Revised 2019-02
New Economics Papers: this item is included in nep-cmp, nep-dge, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Capital Misallocation and Secular Stagnation (2019)
Working Paper: Capital Misallocation and Secular Stagnation (2017)
Working Paper: Capital Misallocation and Secular Stagnation (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1637

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