Microeconomic Adjustment Hazards and Aggregate Dynamics

When does lumpy factor adjustment matter for aggregate dynamics?

We analyze the dynamic e¤ects of lumpy factor adjustments at the …rm level onto the aggregate economy. We …nd that distinguishing between capital and labour as lumpy factors within the production function result in very di¤erent dynamics for aggregate output, investment and labour in an otherwise standard real business cycle model. Lumpy capital leaves the RBC mainly unchanged, while lumpy labo...

Aggregate Growth: What Have We Learned from Microeconomic Evidence? By

Microeconomic Inventory Adjustment: Evidence from U.S. Firm-Level Data

We examine inventory adjustment in the U.S. manufacturing sector using quarterly rmlevel data over the period 1978{97. Our evidence indicates that the inventory investment process is nonlinear and asymmetric, results consistent with a nonconvex adjustment cost structure. The inventory adjustment process di ers over the business cycle: for a given level of excess inventories, rms disinvest more ...

Variable Labor Adjustment Costs and Aggregate Nonlinear Dynamics Simulation Based Estimation and Testing with Us Data

This paper investigates a model of labor-market search, where rms operate under uncertainty. The paper starts from a descriptive approach with U.S. hours worked data. EEciency units display signiicant nonlinearities and speciication tests allow to select a exi-ble non-linear model. We assess the ability of the structural model to mimic these empirical features. Since the reduced form induces un...

Firms and Aggregate Dynamics ∗

We investigate the role of permanent and transitory shocks for firms and aggregate dynamics. We find that permanent shocks to productivity and permanent shifts in the composition of output explain at least 4/5 of firms dynamics. However, these permanent shocks are almost uncorrelated across firms, and are therefore less relevant for aggregate dynamics. Transitory shocks, on the other hand, are ...