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 analyze a financial collapse, such as the one which occurred during the Great Depression, from the perspective of a monetary model with multiple equilibria. The economy we consider contains financial fragility due to increasing returns to scale in the intermediation process. Intermediaries...