Dynamic Complementarities: A Quantitative Analysis

53 Pages Posted: 30 Sep 1996 Last revised: 3 Oct 2010

See all articles by Russell Cooper

Russell Cooper

University of Texas at Austin - Department of Economics; National Bureau of Economic Research (NBER)

Alok Johri

McMaster University - Department of Economics

Date Written: July 1996

Abstract

This paper considers the importance of dynamic complementarities as an endogenous source of propagation in a dynamic stochastic economy. Dynamic complementarities link the stocks of human and organizational capital, which are influenced by past levels of economic activity, to current levels of productivity. We supplement an otherwise standard dynamic business cycle model with both contemporaneous and dynamic complementarities. The model is calibrated using estimates of these effects. Our quantitative analysis identifies empirically relevant dynamic complementarities as a source of propagation for both technology and taste shocks.

Suggested Citation

Cooper, Russell W. and Johri, Alok, Dynamic Complementarities: A Quantitative Analysis (July 1996). NBER Working Paper No. w5691. Available at SSRN: https://ssrn.com/abstract=3360

Russell W. Cooper (Contact Author)

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alok Johri

McMaster University - Department of Economics ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

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