Dynamic Inputs and Resource (Mis)Allocation

• DOI: 10.1086/677072
• Publication Date: 2014-10-08T18:51:09Z
• Authors: John Asker; Allan Collard-Wexler; Jan De Loecker
• Keywords: Marginal revenue; Investment

We investigate the role of dynamic production inputs and their associated adjustment costs in shaping dispersion static measures capital misallocation within industries (and countries). Across nine data sets spanning 40 countries, we find that exhibiting greater time-series volatility productivity have cross-sectional marginal revenue product capital. use a standard investment model with to show variation across these economies can explain large share (80–90 percent) cross-industry cross-country)