Aggregate Dynamics in Lumpy Economies

Isaac Baley and Julio Blanco
Additional contact information
Julio Blanco: University of Michigan

No 903, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: We develop new tools to analyze the aggregate implications of lumpiness in microeconomic adjustment. We derive a set of structural relationships between the steady state moments and the business cycle dynamics, and we show how to discipline these relationships using micro panel data. As an application, we implement our machinery in a standard framework of rm investment with xed adjustment costs. We demonstrate analytically that, in order to explain aggregate capital dynamics, that model must match two steady state moments related to capital misallocation and the time since the last investment. Using plant-level data from Chile, we compute these two moments, and discover that there does not exist a calibration of the lumpy investment model that is consistent with the data.

Date: 2019
New Economics Papers: this item is included in nep-dge and nep-mac
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Aggregate Dynamics in Lumpy Economies (2021)
Working Paper: Aggregate Dynamics in Lumpy Economies (2019)
Working Paper: Aggregate dynamics in lumpy economies (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:903

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