Capital Reallocation and Liquidity with Search Frictions

Yong Kim
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Yong Kim: USC

No 72, 2009 Meeting Papers from Society for Economic Dynamics

Abstract: an environment where both investment and asset liquidity are determined endogenously. This provides a natural framework to analyze the interaction between capital reallocation and liquidity in response to aggregate shocks, which I assess quantitatively. The search model of capital reallocation exhibits strong internal propagation, and can generate substantial changes in factor utilization following aggregate shocks.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed009:72

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