Aggregate Fluctuations and the Industry Structure of the US Economy

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dc.description.abstract Reallocation of inputs in production and substitution across them, are mechanisms through which the economy adjusts to changes in relative efficiency in production across sectors. When input productivity moves along relative prices, cost shares are constant and the input output structure of the economy does not change. I document that cost shares of intermediate inputs fluctuate on average 1.9% in the equipment sector and 1.1% in the consumption sector. Furthermore, cost shares of intermediate inputs from the equipment (consumption) sector are procyclical (countercyclical) across the economy. These facts are used to discipline the behavior of a multisector economy with intermediate goods and neutral and investment specific shocks. I compare the predictions of the model against a comparable economy calibrated to the same steady state, under constant cost shares. I find that neutral shocks become relatively more important in generating output volatility when cost shares are allowed to fluctuate as in the data. Additionally, the paper provides conditions for the existence of a balanced growth path in which all intermediate inputs are used in production, and the economy displays investment specific technological change. en
dc.title Aggregate Fluctuations and the Industry Structure of the US Economy en
dc.contributor.author Caunedo, Julieta
dc.date.accessioned 2018-02-20T19:25:44Z
dc.date.available 2018-02-20T19:25:44Z
dc.date.issued 2018-02-20
dc.identifier.uri http://lacer.lacea.org/handle/123456789/64650
lacea.language.supported en
dc.description Working paper
dc.language.iso en
dc.subject Productivity
dc.subject Aggregate Fluctuations
dc.subject Industry Structure
dc.subject US Economy
dc.type Working Paper

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