Adverse selection, slow-moving capital, and misallocation
نویسندگان
چکیده
منابع مشابه
Adverse Selection, Slow Moving Capital and Misallocation∗
Adverse selection is commonly used to explain trade inefficiencies in many markets. In this paper, we embed an informational asymmetry into a decentralized economy with heterogeneous capital and study its implications for aggregate dynamics in a general equilibrium environment. We show that the information friction leads to slow moving capital and persistent misallocation of resources. The mode...
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Unlike textbook arbitrageurs who instantaneously trade when prices deviate from fundamental values, real world arbitrageurs must overcome various frictions. For example, they often invest other people’s money, resulting in a principal/agent problem that is exacerbated in market downturns. Rather than increasing investment levels when prices dip below fundamental values, arbitrageurs may, in the...
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Resource misallocation lowers aggregate productive effi ciency. The existing literature often infers the magnitude of misallocation from the dispersion of average revenue products. However, the methodology is subject to several identification issues. In particular, the estimator would be upward biased by the presence of unobserved heterogeneities in output and demand elasticities; adjustment co...
متن کاملFinancial Intermediation and Capital Misallocation
To understand the link between financial intermediation activities and the real economy, we put forward a general equilibrium model where agency frictions in the financial sector affect the efficiency of capital reallocation across firms and generate aggregate economic fluctuations. We develop a recursive policy iteration approach to fully characterize the nonlinear equilibrium dynamics and the...
متن کاملThe Sources of Capital Misallocation∗
We develop a methodology to analyze capital misallocation (dispersion in static marginal products) measure the contributions of technological/informational frictions and a rich class of firm-specific factors. An application to Chinese manufacturing firms reveals that adjustment costs and uncertainty, while significant, generate only a modest amount of MPK dispersion, which stems largely from ot...
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ژورنال
عنوان ژورنال: Journal of Financial Economics
سال: 2016
ISSN: 0304-405X
DOI: 10.1016/j.jfineco.2016.01.001