Productivity and Misallocation in General Equilibrium David Rezza Baqaee LSE

@inproceedings{Farhi2017ProductivityAM,
  title={Productivity and Misallocation in General Equilibrium David Rezza Baqaee LSE},
  author={E. Farhi},
  year={2017}
}
We provide a general non-parametric formula for aggregating microeconomic shocks in general equilibrium economies with distortions such as taxes, markups, frictions to resource reallocation, and nominal rigidities. We show that the macroeconomic impact of a shock can be boiled down into two components: its “pure” technology effect; and its effect on… CONTINUE READING