Andrea Eisfeldt and
No 25085, NBER Working Papers from National Bureau of Economic Research, Inc
Capital reallocation is procyclical, despite measured productive reallocative opportunities being acyclical, or even countercyclical. This paper reviews the advances in the literature studying the causes and consequences of capital reallocation (or lack thereof). We provide a comprehensive set of capital reallocation stylized facts for the US, and an illustrative model of capital reallocation in equilibrium. We relate capital reallocation to the broader literatures on business cycles with financial frictions, and on resource misallocation and aggregate productivity. Throughout, we provide directions for future research.
JEL-codes: E13 E22 E3 E32 E44 G31 G34 (search for similar items in EconPapers)
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Published as Andrea L. Eisfeldt & Yu Shi, 2018. "Capital Reallocation," Annual Review of Financial Economics, vol 10(1), pages 361-386.
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