Capital reallocation and liquidity with search frictions

Research output: Contribution to journalArticle

Abstract

I construct a model of an asset market subject to search frictions, in an environment where both investment and asset liquidity are determined endogenously. This provides a natural framework to analyze the interaction between capital reallocation and liquidity in response to aggregate shocks, which I assess quantitatively. The search model of capital reallocation exhibits strong internal propagation, and can generate substantial changes in factor utilization following aggregate shocks.

Original languageEnglish
Pages (from-to)1-29
Number of pages29
JournalJournal of Economic Theory and Econometrics
Volume23
Issue number1
Publication statusPublished - 2012 Mar 1

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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