nep-dge New Economics Papers
on Dynamic General Equilibrium
Issue of 2013‒08‒23
27 papers chosen by
Christian Zimmermann
Federal Reserve Bank of St. Louis

  1. Financial frictions in the euro area: a Bayesian assessment By Villa, Stefania
  2. On Financing Retirement with an Aging Population By Edward Prescott; Ellen McGrattan
  3. Education policy and intergenerational transfers in equilibrium By Brant Abbott; Giovanni Gallipoli; Costas Meghir; Gianluca Violante
  4. Liquidity constraints, risk premia, and themacroeconomic effects of liquidity shocks By Jaccard, Ivan
  5. Mismatch, sorting and wage dynamics By Jeremy Lise; Costas Meghir; Jean-Marc Robin
  6. Informational Fragility of Dynamic Rational Expectations Equilibria By Giacomo Rondina
  7. Migration and Dynamics: How a Leakage of Human Capital Lubricates the Engine of Economic Growth By Sorger, Gerhard; Stark, Oded; Wang, Yong
  8. Research Policy and U.S. Economic Growth By Richard M. H. Suen
  9. Dynamic Wage and Employment Effects of Elder Parent Care By Meghan Skira
  10. Bank leverage cycles By Nuño, Galo; Thomas, Carlos
  11. Banking, Liquidity and Bank Runs in an Infinite Horizon Economy By Nobuhiro Kiyotaki
  12. Capital controls and international financial stability: a dynamic general equilibrium analysis in incomplete markets By Buss, Adrian
  13. Online Appendix to "Multinational Production, Exports and Aggregate Productivity" By Joel Rodrigue
  14. Booms and systemic banking crises By Boissay, Frederic; Collard, Fabrice; Smets, Frank
  15. Oil Windfalls, Fiscal Policy and Money Market Disequilibrium By Salman Huseynov; Vugar Ahmadov
  16. Professional forecasters and the real-time forecasting performance of an estimated new keynesian model for the euro area By Smets, Frank; Warne, Anders; Wouters, Raf
  17. Non-uniform wage-staggering: European evidence and monetary policy implications. By Juillard, M.; Le Bihan, H.; Millard, S.
  18. Health-Related Life Cycle Risks and Public Insurance By Daniel Kemptner
  19. Endogenous time preference: evidence from Australian households' behav iour By Dutta, Dilip; Yang, Yibai
  20. Predictive likelihood comparisons with DSGE and DSGE-VAR models By Warne, Anders; Coenen, Günter; Christoffel, Kai
  21. Smolyak Method for Solving Dynamic Economic Models: Lagrange Interpolation, Anisotropic Grid and Adaptive Domain By Kenneth L. Judd; Lilia Maliar; Serguei Maliar; Rafael Valero
  22. Refugees and Early Childhood Human Capital By Todd Schoellman
  23. Customer Relationship and Sales By Shouyong Shi
  24. Consumers' Imperfect Information and Price Rigidities By Jean-Paul L'Huillier
  25. Optimal Macroprudential Policy By Ko Munakata; Koji Nakamura; Yuki Teranishi
  26. Fiscal policy coordination in monetary unions By Josef Schroth
  27. Aggregate productivity and the allocation of resources over the business cycle By Sophie Osotimehin

  1. By: Villa, Stefania
    Abstract: This paper compares from a Bayesian perspective three dynamic stochastic general equilibrium models in order to analyse whether financial frictions are empirically relevant in the Euro Area (EA) and, if so, which type of financial frictions is preferred by the data. The models are: (i) Smets and Wouters (2007) (SW); (ii) a SW model with financial frictions originating in non-financial firms à la Bernanke et al. (1999), (SWBGG); and (iii) a SW model with financial frictions originating in financial intermediaries, à la Gertler and Karadi (2011), (SWGK). The comparison between the three estimated models is made along different dimensions: (i) the Bayes factor; (ii) business cycle moments; and (iii) impulse response functions. The analysis of the Bayes factor and of simulated moments provides evidence in favour of the SWGK model. This paper also finds that the SWGK model outperforms the SWBGG model in forecasting EA inflationary pressures in a Phillips curve specification. JEL Classification: C11, E44
    Keywords: Bayesian estimation, DSGE Models, Financial Frictions
    Date: 2013–03
  2. By: Edward Prescott (Federal Reserve Bank of Minneapolis); Ellen McGrattan (Federal Reserve Bank of Minneapolis)
    Abstract: A problem facing the United States is financing retirement consumption as its population ages. Policy analysts increasingly advocate savings-for-retirement systems, but are concerned with insufficient savings opportunities with limited government debt. This concern is unwarranted. First, there is more productive capital than commonly assumed in macroeconomic modeling. Second, if the policy reform subsumes the elimination of capital income taxes, then the value of business equity increases relative to the capital stock. Phasing in a switch from the current U.S. system to a savings-for-retirement system without capital income taxes increases welfare of all current and future cohorts.
    Date: 2013
  3. By: Brant Abbott; Giovanni Gallipoli; Costas Meghir (Institute for Fiscal Studies and Yale University); Gianluca Violante (Institute for Fiscal Studies and New York University)
    Abstract: This paper compares partial and general equilibrium effects of alternative financial aid policies intended to promote college participation. We build an overlapping generations life-cycle, heterogeneous-agent, incomplete-markets model with education, labour supply, and consumption/saving decisions. Altruistic parents make inter vivos transfers to their children. Labour supply during college, government grants and loans, as well as private loans, complement parental transfers as sources of funding for college education. We find that the current financial aid system in the U.S. improves welfare, and removing it would reduce GDP by two percentage points in the long-run. Any further relaxation of government-sponsored loan limits would have no salient effects. The short-run partial equilibirum effects of expanding tuition grants (especially their need-based component) are sizable. However, long-run general equilibrium effects are 3-4 times smaller. Every additional dollar of government grants crowds out 20-30 cents of parental transfers.
    Keywords: education, financial aid, inter vivos transfers, credit constraints, equilibrium
    JEL: E24 I22 J23 J24
    Date: 2013–08
  4. By: Jaccard, Ivan
    Abstract: We study the transmission of liquidity shocks in a dynamic general equilibrium model where firms and households are subject to liquidity risk. The provision of liquidity services is undertaken by financial intermediaries that allocate the stock of liquid asset between the different sectors of the economy. We find that the macroeconomic effects of liquidity shocks are considerably larger in the model economy that generates a realistic equity premium. Liquidity constraints amplify business cycle volatility and have nonlinear effects on risk premia. Our empirical analysis suggests that the Great Recession was primarily caused by liquidity factors. JEL Classification: E44, E51, E32
    Keywords: asset pricing, Bayesian estimation, Great Recession
    Date: 2013–03
  5. By: Jeremy Lise (Institute for Fiscal Studies and University College London); Costas Meghir (Institute for Fiscal Studies and Yale University); Jean-Marc Robin (Institute for Fiscal Studies and Sciences Po)
    Abstract: We develop an empirical search-matching model which is suitable for analysing the wage, employment and welfare impact of regulation in a labour market with heterogeneous workers and jobs. To achieve this we develop an equilirium model of wage determination and employment which extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates productivity shocks, long-term contracts, on-the-job search and counter-offers. Importantly, the model allows for the possibility of assortative matching between workers and jobs due to complementarities between worker and job characteristics. We use the model to estimate the potential gain from optimal regulation and we consider the potential gains and redistributive impacts from optimal unemployment insurance policy. The model is estimated on the NLSY using the method of moments.
    Keywords: sorting, mismatch, search-matching, wage dynamics
    Date: 2013–08
  6. By: Giacomo Rondina (University of California, San Diego)
    Abstract: We study the stability properties of Rational Expectations equilibria in dynamic models with incomplete information when the information set of agents is slightly perturbed. We show that equilibria where the endogenous variables resolve the information incompleteness can be informationally fragile, in the sense that a slight perturbation in the endogenous information set of the agents along the equilibrium path can lead to a break-down of the equilibrium dynamics. We then construct a class of dynamic rational expectations equilibria that are informationally stable for the same parameter space where other equilibria are informationally fragile. We show that an equilibrium that is informationally fragile is not least-squares learnable, while an equilibrium that is informationally stable always is. We finally present an application to a macroeconomic equilibrium model with productivity shocks and nominal rigidities under incomplete information that shows that both informationally fragile and stable equilibria can be obtained, with quite different shocks propagation properties.
    Date: 2013
  7. By: Sorger, Gerhard; Stark, Oded; Wang, Yong
    Abstract: This paper studies the growth dynamics of a developing country under migration. Assuming that human capital formation is subject to a strong enough, positive intertemporal externality, the prospect of migration will increase growth in the home country in the long run. If the external effect is less strong, there exists at least a level effect on the stock of human capital in the home country. In either case, the home country experiences a welfare gain, provided that migration is sufficiently restrictive. These results, obtained in a dynamic general equilibrium setting, extend and strengthen the results of Stark and Wang (2002) obtained in the context of a static model.
    Keywords: Overlapping-generations growth model, Intertemporal human capital externalities, Long-run growth effect of the prospect of migration, Social welfare gains, Community/Rural/Urban Development, Institutional and Behavioral Economics, Labor and Human Capital, F22, I30, J24, J61, O15, O40,
    Date: 2013–07
  8. By: Richard M. H. Suen (University of Connecticut)
    Abstract: This paper examines quantitatively the effects of R&D subsidy and government-financed basic research on U.S. economic growth and consumer welfare. To achieve this, we develop an endogenous growth model which takes into account both public and private research investment, and the differences between basic and non-basic research. A calibrated version of the model is able to replicate some important features of the U.S. economy over the period 1953-2009. Our model suggests that government spending on basic research is an effective policy instrument to promote economic growth. Subsidizing private R&D, on the other hand, has no effect on economic growth.
    Keywords: Research Policy, Basic and Applied Research, R&D Spending, Endogenous Growth
    JEL: O31 O38 O41
    Date: 2013–08
  9. By: Meghan Skira (University of Georgia)
    Abstract: This paper formulates and estimates a dynamic discrete choice model of elder parent care and work to analyze how caregiving affects a woman's current and future labor force participation and wages. The model incorporates parental health changes, human capital accumulation, and job offer availability. The estimates indicate that women face low probabilities of returning to work or increasing work hours after a caregiving spell. I use the estimated model to simulate the caregiving, employment, and welfare effects of a longer unpaid work leave than currently available under the Family and Medical Leave Act, a paid leave, and a caregiver allowance.
    Date: 2013
  10. By: Nuño, Galo; Thomas, Carlos
    Abstract: We document the cyclical dynamics in the balance sheets of US leveraged financial intermediaries in the post-war period. Leverage has contributed more than equity to fluctuations in total assets. All three variables are several times more volatile than GDP. Leverage has been positively correlated with assets and (to a lesser extent) GDP, and negatively correlated with equity. These findings are robust across financial subsectors. We then build a general equilibrium model with banks subject to endogenous leverage constraints, and assess its ability to replicate the facts. In the model, banks borrow in the form of collateralized risky debt. The presence of moral hazard creates a link between the volatility in bank asset returns and bank leverage. We find that, while standard TFP shocks fail to replicate the volatility and cyclicality of leverage, volatility shocks are relatively successful in doing so. JEL Classification: E20, G10, G21
    Keywords: call option, cross-sectional volatility, Financial intermediaries, leverage, limited liability, Moral Hazard, put option, short-term collateralized debt
    Date: 2013–03
  11. By: Nobuhiro Kiyotaki (Princeton University)
    Abstract: We develop a variation of the macroeconomic model of banking in Gertler and Kiyotaki (2011) that allows for household liquidity risks and bank runs as in Diamond and Dybvig (1983). As in Gertler and Kiyotaki, because bank net worth fluctuates with aggregate production, the spread in the expected rates of return on bank asset and deposit fluctuates countercyclically. However, because bank assets have a longer maturity than deposits, bank runs are possible as in Diamond and Dybvig. Whether a bank run equilibrium exists depends on bank balance sheets and a liquidation price for bank assets in equilibrium. While in normal times a bank run equilibrium may not exist, the possibility can arise in a recession. Overall, the goal is to present a framework that synthesizes the macroeconomic and microeconomic approaches to banking and banking instability.
    Date: 2013
  12. By: Buss, Adrian
    Abstract: In this paper, we conduct an analysis of the implications of capital controls for financial stability. We study a financial transaction (Tobin) tax applicable to cross-border capital flows in a multi-good, multi-country dynamic equilibrium model with incomplete financial markets and heterogeneous agents. The results derived from the model suggest that the impact of capital controls may vary considerably across market segments. In currency markets, capital controls reduce the volatility. However, in international stock markets, their introduction amplifies price movements, thus, increases the volatility; but it reduces a country's vulnerability to external shocks, thereby limiting spillover effects. JEL Classification: F21, F31, G12, G15
    Keywords: Capital controls, financial stability, financial transaction (Tobin) tax, General Equilibrium, incomplete financial markets
    Date: 2013–08
  13. By: Joel Rodrigue (Vanderbilt University)
    Abstract: Online appendix for the Review of Economic Dynamics article
    Date: 2013
  14. By: Boissay, Frederic; Collard, Fabrice; Smets, Frank
    Abstract: The empirical literature on systemic banking crises (SBCs) has shown that SBCs are rare events that break out in the midst of credit intensive booms and bring about particularly deep and long-lasting recessions. We attempt to explain these phenomena within a dynamic general equilibrium model featuring a non-trivial banking sector. In the model, banks are heterogeneous with respect to their intermediation skills, which gives rise to an interbank market. Moral hazard and asymmetric information on this market may generate sudden interbank market freezes, SBCs, credit crunches and, ultimately, severe recessions. Simulations of a calibrated version of the model indicate that typical SBCs break out in the midst of a credit boom generated by a sequence of positive supply shocks rather than being the outcome of a big negative wealth shock. We also show that the model can account for the relative severity of recessions with SBCs and their longer duration. JEL Classification: E32, E44, G01, G21
    Keywords: Asymmetric information, credit crunch, lending boom, Moral Hazard, systemic banking crisis
    Date: 2013–02
  15. By: Salman Huseynov; Vugar Ahmadov
    Abstract: In this paper, we base our policy analyses and simulations on three different specifications of a DSGE model developed for a CIS oil rich country and check the impact of the oil windfalls. The first proposed specification is a classical one with a Taylor rule and the second one is a recently new specification with a money growth rule. Beside two familiar specifications, we propose a new specification which assumes a temporary money market disequilibrium in the short run. This disequilibrium is a result of the fiscal misbalance and (non-primary) pro-deficit policy pursued by the fiscal authority. We show that all three specifications allow the fiscal authority to act as the main actor in propagating and amplifying the effects of the oil price shocks to the rest of the economy. When an oil shock hits the economy, its first round effect operates through oil fund transfers to the budget. The second round effects result from an increase in government consumption and government investment expenditures, which augments public capital affecting total factor productivity (TFP) and production, as well as the aggregate demand. We also find that despite significant differences, all three specifications demonstrate similar response dynamics.
    Keywords: Fiscal Policy; Oil Windfalls; Public investment; Market Disequilibrium; Oil rich country
    JEL: E47 E58 E61
    Date: 2013–06–15
  16. By: Smets, Frank; Warne, Anders; Wouters, Raf
    Abstract: This paper analyses the real-time forecasting performance of the New Keynesian DSGE model of Galí, Smets, and Wouters (2012) estimated on euro area data. It investigates to what extent forecasts of inflation, GDP growth and unemployment by professional forecasters improve the forecasting performance. We consider two approaches for conditioning on such information. Under the “noise” approach, the mean professional forecasts are assumed to be noisy indicators of the rational expectations forecasts implied by the DSGE model. Under the “news” approach, it is assumed that the forecasts reveal the presence of expected future structural shocks in line with those estimated over the past. The forecasts of the DSGE model are compared with those from a Bayesian VAR model and a random walk. JEL Classification: E24, E31, E32
    Keywords: Bayesian methods, DSGE model, estimated New Keynesian model, macroeconomic forecasting, real-time data, survey data
    Date: 2013–08
  17. By: Juillard, M.; Le Bihan, H.; Millard, S.
    Abstract: In many countries, wage changes tend to be clustered in the beginning of the year, with wages being set for fixed durations of typically one year. This has been, in particular, documented in recent years for European countries using microeconomic data. Motivated by this evidence we build a model of uneven wage staggering, embedded in a standard DSGE model of the euro area, and investigate the monetary policy consequences of non-synchronised wage-setting. The model has the potential to generate responses to monetary policy shocks that differ according to the timing of the shock. Using a realistic calibration of the seasonality in wage-setting, based on a wide survey of European firms, the quantitative difference across quarters turns out however to be moderate. Relatedly, we obtain that the optimal monetary policy rule does not vary much across quarters.
    Keywords: wage-setting, wage-staggering, wage synchronisation, monetary policy shocks, optimal simple monetary policy rules.
    JEL: E27 E52
    Date: 2013
  18. By: Daniel Kemptner
    Abstract: This paper proposes a dynamic life cycle model of health risks, employment, early retirement, and wealth accumulation in order to analyze the health-related risks of consumption and old age poverty. In particular, the model includes a health process, the interaction between health and employment risks, and an explicit modeling of the German public insurance schemes. I rely on a dynamic programming discrete choice framework and estimate the model using data from the German Socio-Economic Panel. I quantify the health-related life cycle risks by simulating scenarios where health shocks do or do not occur at different points in the life cycle for individuals with differing endowments. Moreover, a policy simulation investigates minimum pension benefits as an insurance against old age poverty. While such a reform raises a concern about an increase in abuse of the early retirement option, the simulations indicate that a means test mitigates the moral hazard problem substantially.
    Keywords: Dynamic programming, discrete choice, health, employment, early retirement, consumption, tax and transfer system
    JEL: C61 I14 J22 J26
    Date: 2013
  19. By: Dutta, Dilip; Yang, Yibai
    Abstract: Recently, the focus has been increasingly on the importance of endogenous time preference and its varying degrees of marginal impatience. Two types of marginal impatience can change the representative household's endogenous discount function: increasing (Koopmans-Uzawa type)and decreasing (Becker-Mulligan type), which are induced by current consumption and the investment on future-oriented capital, respectively. By modifying the endogenous discount factor in a small-open-economy RBC model, the equilibrium levels of the turnover in future-oriented capital and current consumption are obtained in a reduced form, which overcomes the non-stationarity problem. The relation between current consumption and the turnover in future-oriented capital is consistent with the empirical evidence from Australia.
    Keywords: Endogenous time preference; Stationarity; Real business cycles; Marginal impatience; Future-oriented capital
    Date: 2013–07
  20. By: Warne, Anders; Coenen, Günter; Christoffel, Kai
    Abstract: This paper shows how to compute the h-step-ahead predictive likelihood for any subset of the observed variables in parametric discrete time series models estimated with Bayesian methods. The subset of variables may vary across forecast horizons and the problem thereby covers marginal and joint predictive likelihoods for a fixed subset as special cases. The basic idea is to utilize well-known techniques for handling missing data when computing the likelihood function, such as a missing observations consistent Kalman filter for linear Gaussian models, but it also extends to nonlinear, nonnormal state-space models. The predictive likelihood can thereafter be calculated via Monte Carlo integration using draws from the posterior distribution. As an empirical illustration, we use euro area data and compare the forecasting performance of the New Area-Wide Model, a small-open-economy DSGE model, to DSGEVARs, and to reduced-form linear Gaussian models. JEL Classification: C11, C32, C52, C53, E37
    Keywords: Bayesian inference, forecasting, Kalman filter, Missing data, Monte Carlo integration
    Date: 2013–04
  21. By: Kenneth L. Judd (Hoover Institution, Stanford University); Lilia Maliar (Department of Economics, Stanford University); Serguei Maliar (Department of Economics, Stanford University); Rafael Valero (University of Alicante)
    Abstract: First, we propose a more e¢ cient implementation of the Smolyak method for inter- polation, namely, we show how to avoid costly evaluations of repeated basis functions in the conventional Smolyak formula. Second, we extend the Smolyak method to include anisotropic constructions; this allows us to target higher quality of approximation in some dimensions than in others. Third, we show how to e¤ectively adapt the Smolyak hyper- cube to a solution domain of a given economic model. Finally, we advocate the use of low-cost .xed-point iteration, instead of conventional time iteration. In the context of one- and multi-agent growth models, we .nd that the proposed techniques lead to sub- stantial increases in accuracy and speed of a Smolyak-based projection method for solving dynamic economic models.
    Keywords: Intergenerational Risk Sharing; Government Transfer Policies; Aggregate Shocks; Incomplete Markets; Stochastic Simulation
    JEL: C63 C68
    Date: 2013–08
  22. By: Todd Schoellman (Arizona State University)
    Abstract: This paper quantifies cross-country differences in early childhood human capital. I embed a standard human capital production function into a cross-country model of human capital investment and labor market outcomes. The model predicts that only some human capital investment channels generate cross-country differences in early childhood human capital. I derive an empirical test of the importance of these channels. The test compares the late-life outcomes of otherwise identical immigrants who entered the U.S. at age 0 or age 5. I implement this test using the Indochinese refugees, who immigrated from poor countries during trying times, and for whom selection is unlikely to bias my results. The empirical results document a striking fact: there is no difference in late-life outcomes between Indochinese refugees who arrived at age 0 or age 5. I conclude that cross-country differences in early childhood human capital are small.
    Date: 2013
  23. By: Shouyong Shi (University of Toronto)
    Abstract: I analyze a search equilibrium of a large market where customer relationship arises endogenously together with service priority and sales. A buyer is related to a seller if he just purchased from the seller, and the relationship is broken if the buyer fails to buy from the seller. I prove that there exists a unique equilibrium where it is optimal for a buyer to make repeat purchases from the related seller and optimal for a seller to give service priority to the related buyer. Moreover, a related seller posts a (high) regular price, and an unrelated seller posts a (low) sale price with the intention to revert to the regular price once he gains a relationship. The fraction of related sellers is endogenous. I examine how market conditions affect the stock of relationships, markups, the size and the duration of a sale.
    Date: 2013
  24. By: Jean-Paul L'Huillier (Einaudi Institute for Economics and Fina)
    Abstract: This paper develops a model of price rigidities and information diffusion in decentralized markets with private information. First, I provide a strategic microfoundation for price rigidities, by showing that firms are better off delaying the adjustment of prices when they face a high number of uninformed consumers. Second, in an environment where consumers learn from firms' prices, the diffusion of information follows a Bernoulli differential equation. Therefore, learning follows nonlinear dynamics. Third, the price rigidity produces an informational externality that affects welfare. Fourth, the dynamics of output and inflation are hump-shaped due to consumer learning.
    Date: 2013
  25. By: Ko Munakata; Koji Nakamura; Yuki Teranishi
    Abstract: We introduce financial market friction through search and matching in the loan market into a standard New Keynesian model. We reveal that the second order approximation of social welfare includes the terms related to credit, such as credit market tightness, the volume of credit, and the loan separation rate, in addition to the inflation rate and consumption under financial market friction. Our analytical result justifies why optimal policy should take credit variation into account. We introduce monetary policy and macroprudential policy measures for financial stability into the model. The optimal outcome is achieved through monetary and macroprudential policies by taking into account not only price stability but also financial stability.
    Keywords: Optimal macroprudential policy; optimal monetary policy; financial market friction
    JEL: E44 E52 E61
    Date: 2013–08
  26. By: Josef Schroth (Bank of Canada)
    Abstract: The paper studies the design of optimal fiscal rules for members of a monetary union when there are privately observed shocks to countries’ social cost of domestic taxation. First, I show that optimal fiscal rules prescribe policy coordination in the sense of domestic taxation efforts that are positively correlated across member countries. In particular, coordination achieves higher ex-ante joint welfare than any fixed upper bound on domestic deficits. Second, I show that a history of asymmetric domestic taxation efforts leads to tighter policy coordination in the sense of an emergence of retaliatory fiscal policies. As a result, past disagreement leads to an increase in expected domestic deficits across the monetary union.
    Date: 2013
  27. By: Sophie Osotimehin
    Abstract: RThis paper proposes a novel decomposition of aggregate productivity to evaluate the role of resource reallocation for the cyclical dynamics of aggregate productivity. The decomposition, which is derived from the aggregation of heterogeneous firm-level production functions, accounts for changes in allocative efficiency, as well as for changes in entry and exit. This approach thereby extends Solow (1957)’s growth accounting exercise to a framework with firm heterogeneity and frictions in the allocation of resources across firms. I apply the decomposition to a comprehensive dataset of French manufacturing and service firms and find that entry and exit contribute little to the year-on-year variability of aggregate productivity. Resource reallocation across incumbent firms, however, plays an important role in the dynamics of aggregate productivity. The efficiency of resource allocation improves during downturns and tend to reduce the volatility of aggregate productivity
    Keywords: aggregate productivity, aggregate fluctuations, resource allocation, entry and exit, cleansing
    JEL: E32 O47 D24
    Date: 2013–08

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