TY - JOUR
T1 - Organizational dynamics and aggregate fluctuations
T2 - The role of financial relationships
AU - Otsu, Keisuke
AU - Saito, Masashi
N1 - Funding Information:
The authors thank the editor, two anonymous referees, Jagjit Chadha, Ippei Fujiwara, Kaoru Hosono, Hidehiko Ishihara, Tsuyoshi Mihira, Tsutomu Miyagawa, Masaya Sakuragawa, Yukie Sakuragawa, Haruna Usui, Tomoaki Yamada, and seminar participants at the Society for Computational Economics 16th International Conference on Computing in Economics and Finance, the 2012 Royal Economic Society Annual Conference, and the Bank of Japan Institute for Monetary and Economic Studies for helpful comments. The views expressed in this paper are those of the authors and do not reflect those of the Bank of Japan. Otsu acknowledges the financial support by a grant-in-aid from the Zengin Foundation for Studies on Economics and Finance.
PY - 2013/12
Y1 - 2013/12
N2 - This paper constructs an estimated dynamic stochastic general equilibrium model to study the role of labor reallocation between production and organizational tasks within a firm in movements in measured TFP in Japan. Allocating more labor to organizational tasks strengthens the financial relationship with financial intermediaries and helps firms to mitigate a widening in credit spread during financial difficulties. However, doing so reduces the labor allocated to production tasks and hence the measured TFP. Our quantitative analysis indicates that labor reallocation contributes to the observed procyclicality in measured TFP. We also find that this mechanism amplifies and propagates the effects of exogenous shocks on aggregate activity.
AB - This paper constructs an estimated dynamic stochastic general equilibrium model to study the role of labor reallocation between production and organizational tasks within a firm in movements in measured TFP in Japan. Allocating more labor to organizational tasks strengthens the financial relationship with financial intermediaries and helps firms to mitigate a widening in credit spread during financial difficulties. However, doing so reduces the labor allocated to production tasks and hence the measured TFP. Our quantitative analysis indicates that labor reallocation contributes to the observed procyclicality in measured TFP. We also find that this mechanism amplifies and propagates the effects of exogenous shocks on aggregate activity.
KW - Aggregate fluctuations
KW - Financial relationship
KW - Labor reallocation
KW - Organizational capital
KW - TFP
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U2 - 10.1016/j.jedc.2013.07.010
DO - 10.1016/j.jedc.2013.07.010
M3 - Article
AN - SCOPUS:84887824585
SN - 0165-1889
VL - 37
SP - 3044
EP - 3058
JO - Journal of Economic Dynamics and Control
JF - Journal of Economic Dynamics and Control
IS - 12
ER -