.png){kind=icon}
.png){kind=icon}
Return
Constrained-Efficient Capital Reallocation
.png){kind=icon}
OA
AI
DOI：10.1257/aer.20210902.png)
.png){kind=icon}
Original request for help.png){kind=icon}
Share.png){kind=icon}
Save
Abstract
En 中文
We characterize efficiency in an equilibrium model of investment and capital reallocation with heterogeneous firms facing collateral constraints. The model features two types of pecuniary externalities: collateral externalities, because the resale price of capital affects collateral constraints, and distributive externalities, because buyers of old capital are more financially constrained than sellers, consis-tent with empirical evidence. We prove that the stationary equilib-rium price of old capital is inefficiently high because the distributive externality exceeds the collateral externality, by a factor of two when we calibrate the model. New investment reduces the future price of old capital, providing a rationale for new-investment subsidies. (JEL D21, D24, D25, D62, E22, G31, G32)
Keywords:
EQUILIBRIUM-MODEL
CREDIT SHOCKS
STOCK-MARKET
INVESTMENT
EXTERNALITIES
MISALLOCATION
PRODUCTIVITY
FRICTIONS
DYNAMICS
POLICIES