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Organizational Dynamics and Aggregate Fluctuations: The Role of Financial Relationships

Keisuke Otsu () and Masashi Saito

Studies in Economics from School of Economics, University of Kent

Abstract: This paper constructs a dynamic stochastic general equilibrium model in which labor reallocations between production and organizational tasks generate endogenous TFP movements and also amplify and propagate the effects of exogenous shocks on macroeconomic activity. Organizational tasks in our model enhances financial relationships between firms and lenders, which lowers the credit spread. We calibrate and estimate the model using Japanese data and conduct a quantitative analysis. Our results suggest that the labor reallocation channel considered in this paper contributes greatly to the observed movements in the measured TFP, and serves as a quantitatively important amplification and propagation mechanism in aggregate fluctuations.

Keywords: Labor Reallocations; Financial Relationship; Organizational Capital; TFP; Aggregate Fluctuations (search for similar items in EconPapers)
JEL-codes: E13 E32 (search for similar items in EconPapers)
Date: 2011-02
New Economics Papers: this item is included in nep-dge and nep-mac
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Journal Article: Organizational dynamics and aggregate fluctuations: The role of financial relationships (2013) Downloads
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