id="info"

Heterogeneous Productivity Shocks, Elasticity Of Substitution And Aggregate Fluctuations

The authors use a Dixit-Stiglitz setting to show that aggregate productivity fluctuations can be generated through changes in the dispersion of firms' productivity. When the elasticity of substitution among goods is larger than one, an increase in the dispersion raises aggregate productivity because firms at the top of the distribution produce most of output. When the elasticity is smaller than one, an increase in the dispersion reduces aggregate productivity because firms at the bottom of the distribution use most of inputs.

Provided by: Munich Personal Repec Archive Topic: Project Management Date Added: Feb 2011 Format: PDF

Find By Topic