EconPapers    
Economics at your fingertips  
 

Aggregate Dynamics in Lumpy Economies

Isaac Baley () and Andrés Blanco

No 1116, Working Papers from Barcelona Graduate School of Economics

Abstract: In economies with lumpy microeconomic adjustment, we establish structural relationships between the dynamics of the cross-sectional distribution of agents and its steady-state counterpart and discipline these relationships using micro data. Applying our methodology to firm lumpy investment, we discover that the dynamics of aggregate capital are structurally linked to two cross-sectional moments of the capital-to-productivity ratio: its dispersion and its covariance with the time elapsed since the last adjustment. We compute these sufficient statistics using plant–level data on the size and frequency of investments. We find that, in order to explain investment dynamics, the benchmark model with fixed adjustment costs must also feature a precise combination of irreversibility and random opportunities of free adjustment.

Keywords: inaction; lumpiness; transitional dynamics; non convex adjustment costs; sufficient statistics; firm investment; adjustment hazard; Ss models (search for similar items in EconPapers)
JEL-codes: D30 D80 E20 E30 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/1116.pdf (application/pdf)

Related works:
Working Paper: Aggregate Dynamics in Lumpy Economies (2019) Downloads
Working Paper: Aggregate dynamics in lumpy economies (2019) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1116

Access Statistics for this paper

More papers in Working Papers from Barcelona Graduate School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Bruno Guallar ().

 
Page updated 2020-06-27
Handle: RePEc:bge:wpaper:1116