Labor leverage, coordination failures, and aggregate risk

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Vydáno v:IDEAS Working Paper Series from RePEc (2021), p. n/a
Hlavní autor: Bouvard, Matthieu
Další autoři: de Motta, Adolfo
Vydáno:
Federal Reserve Bank of St. Louis
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100 1 |a Bouvard, Matthieu 
245 1 |a Labor leverage, coordination failures, and aggregate risk 
260 |b Federal Reserve Bank of St. Louis  |c 2021 
513 |a Working Paper 
520 3 |a This paper studies an economy where demand spillovers make firms’ production decisions strategic complements. Firms choose their operating leverage trading off higher fixed costs for lower variable costs. Operating leverage governs firms’ exposures to an aggregate labor productivity shock. In equilibrium, firms exhibit excessive operating leverage as they do not internalize that an economy with higher aggregate operating leverage is more likely to fall into a recession following a negative productivity shock. Welfare losses coming from firms’ failure to coordinate production are amplified by suboptimal risk-taking, which magnifies the impact of productivity shocks onto aggregate output. 
653 |a Operating leverage 
653 |a Productivity 
700 1 |a de Motta, Adolfo 
773 0 |t IDEAS Working Paper Series from RePEc  |g (2021), p. n/a 
786 0 |d ProQuest  |t ABI/INFORM Global 
856 4 1 |3 Citation/Abstract  |u https://www.proquest.com/docview/2587279672/abstract/embedded/7BTGNMKEMPT1V9Z2?source=fedsrch 
856 4 0 |3 Full text outside of ProQuest  |u https://ideas.repec.org/p/tse/wpaper/125154.html