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Turbulence, Firm Decentralization, and Growth in Bad Times

By Philippe Aghion, Nicholas Bloom, Brian Lucking, Raffaella Sadun, and John Van Reenen

American Economic Journal: Applied Economics, January 2021

What is the optimal form of firm organization during "bad times"? The greater turbulence following macro shocks may benefit decentralized firms because the value of local information increases (the "localist" view). On the other hand, the need to make t...

Sectoral Price Facts in a Sticky-Price Model

By Carlos Carvalho, Jae Won Lee, and Woong Yong Park

American Economic Journal: Macroeconomics, January 2021

We develop a multisector sticky-price DSGE model that can endogenously deliver differential responses of prices to aggregate and sectoral shocks. Input-output production linkages and a (standard) monetary policy rule contribute to a slow response of price...