This paper studies the interaction between capital reallocation and business cycles. Capital reallocation is pro-cyclical and leads to variations in measured aggregate productivity. Using a simulated method of moments approach, different sources of aggregate fluctuations are studied to assess...

We study the employment and productivity effects of short-time work (STW) in Germany between 2009 and 2010. The policy facilitated reductions in hours worked per employee with the goal of preventing layoffs. Using confidential German micro-level data we estimate a search model with heterogeneous...