Skip to main content

Dynamic Inputs and Resource (Mis)Allocation

Author(s): Asker, John; Collard-Wexler, Allan; De Loecker, Jan

To refer to this page use:
Abstract: We investigate the role of dynamic production inputs and their associated adjustment costs in shaping the dispersion of static measures of capital misallocation within industries (and countries). Across nine data sets spanning 40 countries, we find that industries exhibiting greater time-series volatility of productivity have greater cross-sectional dispersion of the marginal revenue product of capital. We use a standard investment model with adjustment costs to show that variation in the volatility of productivity across these industries and economies can explain a large share (80-90 percent) of the cross-industry (and cross-country) variation in the dispersion of the marginal revenue product of capital.
Publication Date: Oct-2014
Citation: Asker, John, Collard-Wexler, Allan, De Loecker, Jan. (2014). Dynamic Inputs and Resource (Mis)Allocation. Journal of Political Economy, 122 (5), 1013 - 1063. doi:10.1086/677072
DOI: doi:10.1086/677072
ISSN: 0022-3808
EISSN: 1537-534X
Pages: 1013 - 1063
Type of Material: Journal Article
Journal/Proceeding Title: Journal of Political Economy
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

Items in OAR@Princeton are protected by copyright, with all rights reserved, unless otherwise indicated.