Organizational dynamics and aggregate fluctuations: The role of financial relationships

Keisuke Otsu, Masashi Saito

Research output: Contribution to journalArticle

Abstract

This paper constructs an estimated dynamic stochastic general equilibrium model to study the role of labor reallocation between production and organizational tasks within a firm in movements in measured TFP in Japan. Allocating more labor to organizational tasks strengthens the financial relationship with financial intermediaries and helps firms to mitigate a widening in credit spread during financial difficulties. However, doing so reduces the labor allocated to production tasks and hence the measured TFP. Our quantitative analysis indicates that labor reallocation contributes to the observed procyclicality in measured TFP. We also find that this mechanism amplifies and propagates the effects of exogenous shocks on aggregate activity.

Original languageEnglish
Pages (from-to)3044-3058
Number of pages15
JournalJournal of Economic Dynamics and Control
Volume37
Issue number12
DOIs
Publication statusPublished - 2013 Dec
Externally publishedYes

Fingerprint

Personnel
Fluctuations
General Equilibrium
Equilibrium Model
Stochastic Dynamics
Quantitative Analysis
Japan
Shock
Business
Relationships
Labor
Aggregate fluctuations
Labor reallocation
Chemical analysis
Movement
Exogenous shocks
Quantitative analysis
Dynamic stochastic general equilibrium model
Financial intermediaries
Credit spreads

Keywords

  • Aggregate fluctuations
  • Financial relationship
  • Labor reallocation
  • Organizational capital
  • TFP

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics

Cite this

Organizational dynamics and aggregate fluctuations : The role of financial relationships. / Otsu, Keisuke; Saito, Masashi.

In: Journal of Economic Dynamics and Control, Vol. 37, No. 12, 12.2013, p. 3044-3058.

Research output: Contribution to journalArticle

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