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Annual Review of Financial Economics

Volume 10, 2018

Capital Reallocation

Abstract

Capital reallocation is procyclical, despite measured productive reallocative opportunities being acyclical or even countercyclical. This article reviews the advances in the literature studying the causes and consequences of capital reallocation (or lack thereof). We provide a comprehensive set of stylized facts about capital reallocation for the United States and an illustrative model of capital reallocation in equilibrium. We relate capital reallocation to the broader literatures on business cycles with financial frictions and on resource misallocation and aggregate productivity. Throughout, we provide directions for future research.

Keyword(s): business cycles, capital liquidity, capital reallocation, financial frictions, investment, JEL E00, JEL E13, JEL E22, JEL E32, JEL G00, JEL G31, JEL G34, misallocation
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2018-11-01
2025-04-20
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/content/journals/10.1146/annurev-financial-110217-023000
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Capital Reallocation
Annual Review of Financial Economics 10, 361 (2018); https://doi.org/10.1146/annurev-financial-110217-023000
/content/journals/10.1146/annurev-financial-110217-023000
/content/journals/10.1146/annurev-financial-110217-023000
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