Capital Reallocation

Posted: 8 Nov 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: November 2018


Capital reallocation is procyclical, despite measured productive reallocative opportunities being acyclical or even countercyclical. This article reviews the advances in the literature studying the causes and consequences of capital reallocation (or lack thereof). We provide a comprehensive set of stylized facts about capital reallocation for the United States 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.

Suggested Citation

Eisfeldt, Andrea L. and Shi, Yu, Capital Reallocation (November 2018). Annual Review of Financial Economics, Vol. 10, pp. 361-386, 2018, Available at SSRN: or

Andrea L. Eisfeldt (Contact Author)

UCLA Anderson School of Management ( email )

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

HOME PAGE: http://

Yu Shi

UCLA Anderson School of Management ( email )

Los Angeles, CA
United States

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