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Search Complementarities, Aggregate Fluctuations, and Fiscal Policy / Jesús Fernández-Villaverde, Federico Mandelman, Yang Yu, Francesco Zanetti.
- Format:
- Book
- Author/Creator:
- Fernández-Villaverde, Jesús.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w26210.
- NBER working paper series no. w26210
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2019.
- Summary:
- 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.
- Notes:
- Print version record
- August 2019.
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