[go: up one dir, main page]

IDEAS home Printed from https://ideas.repec.org/p/liv/livedp/202302.html
   My bibliography  Save this paper

Intangible Cycles

Author

Listed:
  • Shalini Mitra
  • Gareth Liu-Evans
Abstract
What is the role of an intangible investment technology shock in driving and propagating business cycles? We show that the ability of entrepreneurs to reallocatephysical investment across (final goods and intangible investment) sectors within the firm, in response to such a shock, is key to quantitatively generating volatility and comovement among macroeconomic aggregates at business cycle frequencies. Such a channel is consistent with observed within-firm procyclical investment dispersion in the data and does not arise in the case of household ownership of intangible-capitalaccumulating firms. Moreover, the unmeasured nature of intangible investments and the hump-shaped response of final goods implies that there is an almost zero correlation of the positive intangible investment shock to measured aggregate total factor productivity.

Suggested Citation

  • Shalini Mitra & Gareth Liu-Evans, 2023. "Intangible Cycles," Working Papers 202302, University of Liverpool, Department of Economics, revised May 2023.
  • Handle: RePEc:liv:livedp:202302
    as

    Download full text from publisher

    File URL: https://www.liverpool.ac.uk/media/livacuk/schoolofmanagement/docs/ECON,WP,2023-2,Mitra.pdf
    File Function: First version, 2021
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Francisco J. Buera & Benjamin Moll, 2015. "Aggregate Implications of a Credit Crunch: The Importance of Heterogeneity," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 1-42, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kohn, David & Leibovici, Fernando & Szkup, Michal, 2020. "Financial frictions and export dynamics in large devaluations," Journal of International Economics, Elsevier, vol. 122(C).
    2. Feng Dong, 2023. "Aggregate Implications of Financial Frictions for Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 48, pages 45-71, April.
    3. Chen, Cheng & Senga, Tatsuro & Sun, Chang & Zhang, Hongyong, 2023. "Uncertainty, imperfect information, and expectation formation over the firm’s life cycle," Journal of Monetary Economics, Elsevier, vol. 140(C), pages 60-77.
    4. Gerth Florian & Otsu Keisuke, 2018. "The post-crisis slump in Europe: a business cycle accounting analysis," The B.E. Journal of Macroeconomics, De Gruyter, vol. 18(1), pages 1-25, January.
    5. Shirai, Daichi, 2016. "Persistence and Amplification of Financial Frictions," MPRA Paper 72187, University Library of Munich, Germany.
    6. Oshiro, Jun & Sato, Yasuhiro, 2021. "Industrial structure in urban accounting," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    7. Felipe Saffie & Liliana Varela & Kei-Mu Yi, 2020. "The Micro and Macro Dynamics of Capital Flows," NBER Working Papers 27371, National Bureau of Economic Research, Inc.
    8. Monacelli, Tommaso & Sala, Luca & Siena, Daniele, 2023. "Real interest rates and productivity in small open economies," Journal of International Economics, Elsevier, vol. 142(C).
    9. Straub, Ludwig & Ulbricht, Robert, 2019. "Endogenous second moments: A unified approach to fluctuations in risk, dispersion, and uncertainty," Journal of Economic Theory, Elsevier, vol. 183(C), pages 625-660.
    10. Ander Perez-Orive & Andrea Caggese, 2017. "Capital Misallocation and Secular Stagnation," 2017 Meeting Papers 382, Society for Economic Dynamics.
    11. Brinca, P. & Chari, V.V. & Kehoe, P.J. & McGrattan, E., 2016. "Accounting for Business Cycles," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1013-1063, Elsevier.
    12. Ohdoi, Ryoji, 2024. "Financial shocks to banks, R&D investment, and recessions," Macroeconomic Dynamics, Cambridge University Press, vol. 28(5), pages 999-1022, July.
    13. Arce, Óscar & Nuño, Galo & Thaler, Dominik & Thomas, Carlos, 2020. "A large central bank balance sheet? Floor vs corridor systems in a New Keynesian environment," Journal of Monetary Economics, Elsevier, vol. 114(C), pages 350-367.
    14. Tong Zhang, 2019. "Haircut Cycles," 2019 Meeting Papers 124, Society for Economic Dynamics.
    15. Ai, Hengjie & Li, Kai & Yang, Fang, 2020. "Financial intermediation and capital reallocation," Journal of Financial Economics, Elsevier, vol. 138(3), pages 663-686.
    16. Julian di Giovanni & Manuel García-Santana & Priit Jeenas & Enrique Moral-Benitoz & Josep Pijoan-Mas, 2022. "Government Procurement and Access to Credit: Firm Dynamics and Aggregate Implications," Working Papers 2233, Banco de España.
    17. Emmanuel Dhyne & Ayumu Ken Kikkawa & Glenn Magerman, 2022. "Imperfect Competition in Firm-to-Firm Trade," Journal of the European Economic Association, European Economic Association, vol. 20(5), pages 1933-1970.
    18. Nadav Ben Zeev & Tomer Ifergane, 2022. "Firing Restrictions and Economic Resilience: Protect and Survive?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 43, pages 93-124, January.
    19. Gita Gopinath & Şebnem Kalemli-Özcan & Loukas Karabarbounis & Carolina Villegas-Sanchez, 2017. "Capital Allocation and Productivity in South Europe," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1915-1967.
    20. Francisco J. Buera & Juan Pablo Nicolini, 2020. "Liquidity Traps and Monetary Policy: Managing a Credit Crunch," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(3), pages 110-138, July.

    More about this item

    Keywords

    Intangible investment shock; reallocation; intangible capital; business cycles; comovement; investment dispersion;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:liv:livedp:202302. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Rachel Slater (email available below). General contact details of provider: https://edirc.repec.org/data/mslivuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.