Dynamic complementarities: A quantitative analysis

Russell W. Cooper, Alok Johri

Research output: Contribution to journalArticlepeer-review

28 Scopus citations

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 from both micro and aggregate data. Our quantitative analysis identifies empirically relevant dynamic complementarities as a source of propagation for both technology and taste shocks.

Original languageEnglish (US)
Pages (from-to)97-119
Number of pages23
JournalJournal of Monetary Economics
Volume40
Issue number1
DOIs
StatePublished - Sep 1997

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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