Search Complementarities, Aggregate Fluctuations, and Fiscal Policy

Jesus Fernandez-Villaverde, Federico Mandelman, Yang Yu and Francesco Zanetti

No 26210, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We document five novel facts about the role of search effort in forming trading relationships among firms by combining a variety of micro and macro datasets. These facts strongly suggest the presence of search complementarities. To study the implications of these facts for aggregate fluctuations, we build a dynamic general equilibrium model, disciplined by our new firm-level evidence on search effort. The model matches key aspects of the macro and micro data that have remained unaccounted for by standard models, including the time-varying bimodal distribution of output and the strong, nonlinear propagation of shocks. Also, changes to the volatility of shocks have nonlinear effects on macroeconomic fluctuations that advance a novel interpretation of the Great Moderation. Finally, we provide a new account of the state-dependent effects of fiscal policy.

JEL-codes: C63 C68 E32 E37 E44 G12 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-dge, nep-mac and nep-ore
Note: EFG
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Citations: View citations in EconPapers (16)

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Related works:
Working Paper: Search Complementarities, Aggregate Fluctuations,and Fiscal Policy (2022)
Working Paper: Search Complementarities, Aggregate Fluctuations,and Fiscal Policy (2019)
Working Paper: Search Complementarities, Aggregate Fluctuations, and Fiscal Policy (2019)
Working Paper: Search Complementarities, Aggregate Fluctuations, and Fiscal Policy (2019)
Working Paper: Search Complementarities, Aggregate Fluctuations, and Fiscal Policy (2019)
Working Paper: Search Complementarities, Aggregate Fluctuations, and Fiscal Policy (2019)
Working Paper: Search Complementarities, Aggregate Fluctuations, and Fiscal Policy (2019)
Working Paper: Search Complementarities, Aggregate Fluctuations, and Fiscal Policy (2019)
Working Paper: Search Complementarities, Aggregate Fluctuations, and Fiscal Policy (2019)
Working Paper: Search Complementarities, Aggregate Fluctuations and Fiscal Policy (2018)
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