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TOPIC:
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FRICTIONAL CAPITAL REALLOCATION
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ABSTRACT
This paper studies economies where firms acquire capital in primary markets, then, after idiosyncratic productivity shocks, retrade it in secondary markets incorporating bilateral trade with search, bargaining and liquidity frictions. We distinguish carefully between full or partial sales (one firm gets all or some of the other’s capital), and document several long- and short-run empirical patterns between these variables and the cost of liquidity measured by inflation. Quantitatively, the model can match these patterns plus the facts deemed important in business cycle theory. We also investigate the impact of search frictions, monetary and fiscal policy and persistence in firmspecific shocks.
Keywords: Capital, Investment, Reallocation, Liquidity
JEL Codes: E22, E44
Click here to view the CV.
Click here to view the paper.
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PRESENTER
Randall Wright
University of Wisconsin-Madison
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RESEARCH FIELDS
Monetary Economics
Macroeconomics
Labor Economics
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DATE:
8 March 2023 (Wednesday)
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TIME:
4pm - 5.30pm
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VENUE:
Meeting Room 5.1, Level 5
School of Economics
Singapore Management University
90 Stamford Road
Singapore 178903
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