Search complementarities, aggregate fluctuations, and fiscal policy
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...
| Main Authors: | , , , |
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| Format: | Journal article |
| Language: | English |
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Oxford University Press
2024
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| _version_ | 1826313557966323712 |
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| author | Fernandez-Villaverde, J Mandelman, F Yu, Y Zanetti, F |
| author_facet | Fernandez-Villaverde, J Mandelman, F Yu, Y Zanetti, F |
| author_sort | Fernandez-Villaverde, J |
| collection | OXFORD |
| description | 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. |
| first_indexed | 2024-03-07T08:10:53Z |
| format | Journal article |
| id | oxford-uuid:48916e76-3628-4d9e-9621-a1b7af5a77cc |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-09-25T04:18:41Z |
| publishDate | 2024 |
| publisher | Oxford University Press |
| record_format | dspace |
| spelling | oxford-uuid:48916e76-3628-4d9e-9621-a1b7af5a77cc2024-07-24T12:04:37ZSearch complementarities, aggregate fluctuations, and fiscal policyJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:48916e76-3628-4d9e-9621-a1b7af5a77ccEnglishSymplectic ElementsOxford University Press2024Fernandez-Villaverde, JMandelman, FYu, YZanetti, FWe 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. |
| spellingShingle | Fernandez-Villaverde, J Mandelman, F Yu, Y Zanetti, F Search complementarities, aggregate fluctuations, and fiscal policy |
| title | Search complementarities, aggregate fluctuations, and fiscal policy |
| title_full | Search complementarities, aggregate fluctuations, and fiscal policy |
| title_fullStr | Search complementarities, aggregate fluctuations, and fiscal policy |
| title_full_unstemmed | Search complementarities, aggregate fluctuations, and fiscal policy |
| title_short | Search complementarities, aggregate fluctuations, and fiscal policy |
| title_sort | search complementarities aggregate fluctuations and fiscal policy |
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