Capital Reallocation

Annual Review of Financial Economics, 2018

36 Pages Posted: 7 Oct 2018

See all articles by Andrea L. Eisfeldt

Andrea L. Eisfeldt

UCLA Anderson School of Management

Yu Shi

UCLA Anderson School of Management

Multiple version iconThere are 3 versions of this paper

Date Written: September 14, 2018

Abstract

Capital reallocation is procyclical, despite measured productive reallocative opportunities being acyclical, or even countercyclical. This paper reviews the advances in the literature studying the causes and consequences of capital reallocation (or lack thereof). We provide a comprehensive set of capital reallocation stylized facts for the US, and an illustrative model of capital reallocation in equilibrium. We relate capital reallocation to the broader literatures on business cycles with financial frictions, and on resource misallocation and aggregate productivity. Throughout, we provide directions for future research.

Keywords: Capital Reallocation, Misallocation, Business Cycles, Financial Frictions

Suggested Citation

Eisfeldt, Andrea L. and Shi, Yu, Capital Reallocation (September 14, 2018). Annual Review of Financial Economics, 2018, Available at SSRN: https://ssrn.com/abstract=3249678

Andrea L. Eisfeldt (Contact Author)

UCLA Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://https://sites.google.com/site/andrealeisfeldt/

Yu Shi

UCLA Anderson School of Management ( email )

Los Angeles, CA
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
98
Abstract Views
857
rank
304,401
PlumX Metrics