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The market for used capital: Endogenous irreversibility and reallocation over the business cycle

Publication ,  Scholarly Edition
Lanteri, A
September 1, 2018

This paper studies the business- cycle dynamics of secondary markets for physical capital and their effects on the macroeconomy. In the data, both capital reallocation and the price of used capital are procyclical. To rationalize these facts, I propose a model with endogenous partial irreversibility, where used investment goods are imperfect substitutes for new ones because of firm- level capital specificity. Equilibrium dynamics in the market for used capital induce countercyclical dispersion of marginal products of capital, propagate movements in aggregate TFP, and provide a microfoundation for state- dependent nonconvex capital adjustment costs.

Duke Scholars

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DOI

Publication Date

September 1, 2018

Start / End Page

2383 / 2419

Related Subject Headings

  • Economics
  • 38 Economics
  • 35 Commerce, management, tourism and services
  • 15 Commerce, Management, Tourism and Services
  • 14 Economics
 

DOI

Publication Date

September 1, 2018

Start / End Page

2383 / 2419

Related Subject Headings

  • Economics
  • 38 Economics
  • 35 Commerce, management, tourism and services
  • 15 Commerce, Management, Tourism and Services
  • 14 Economics