Reallocation and Learning Over the Business Cycle

Fabiano Schivardi

Working Papers from Banca Italia - Servizio di Studi

Abstract: I show how cyclical aggregate shocks can stimulate structural reallocation activities, which in turn amplify the effect of the shock. I emphasize the informational aspects related to restructuring activities and their potential interplay with aggregate shocks. Building on work by Caplin and Leahy (1994), I develop a model in which production units are uncertain about the value of staying in the market and learn about it over time in a Bayesian fashion. In addition to their own private assessment, they can also learn from observing other units' decisions.

Keywords: BUSINESS CYCLES; BUSINESS ORGANIZATION; LEARNING (search for similar items in EconPapers)
JEL-codes: D21 D92 (search for similar items in EconPapers)
Pages: 43 pages
Date: 1998
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Citations: View citations in EconPapers (5)

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Journal Article: Reallocation and learning over the business cycle (2003)
Working Paper: Reallocation and Learning over the Business Cycle (1998)
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