Erzo Luttmer: Slow Convergence in Economies with Organization Capital
Slow Convergence in Economies with Organization Capital
Time: 1:30pm-3:00pm, Dec. 15th, 2018
Venue: 2nd Floor of Wanzhong Building, Langrun Garden, Peking University
Speaker: Erzo Luttmer (University of Minnesota and Federal Reserve Bank of Minneapolis)
Most firms begin very small, and large firms are the result of typically decades of persistent growth. This growth can be understood as the result of some form of capital accumulation-organization capital. In the US, the distribution of firm size k has a right tail only slightly thinner than 1/k. This means that most capital accumulation must be accounted for by incumbent firms. This paper describes a range of circumstances in which this implies aggregate convergence rates that are only about half of what they are in the standard Cass-Koopmans economy. Through the lens of the models described in this paper, the aftermath of the Great Recession of 2008 is unsurprising if the events of late 2008 and early 2009 are interpreted as a destruction of organization capital.
Business cycles; Firm size distribution; Slow recoveries; Zipf's law
Erzo Luttmer is currently a professor of Economics at the University of Minnesota, a visiting scholar at the Federal Reserve Bank of Minneapolis, and also a member on the International Academic Advisory Council of the Institute of New Structural Economics (INSE) at Peking University. His main research interests are economic growth and macroeconomics. Among others, his recent work has explored the mechanics of firm growth, and the role of technology diffusion in economic growth and income inequality. His papers have been published in top economic journals, including Econometrica, Journal of Political Economy, The Review of Economic Studies and The Quarterly Journal of Economics. Before moving to Minnesota, he was the faculty at Northwestern University and London School of Economics. He obtained his Ph.D.in Economics from the University of Chicago in 1992.
Topic: Firm Dynamics
Time: 3pm-6pm, Dec. 11th, 2018
Venue: 359s, Overseas Exchange Center, Peking University
Course: Advanced Topics in Economic Growth