Evidence on Macroeconomic Complementarities

Russell Cooper, John Haltiwanger

NBER Working Paper No. 4577
Issued in December 1993
NBER Program(s):   EFG

This paper provides empirical evidence on macroeconomic complementarities, a restriction on the nature of interaction between individuals in a multi-agent setting. These models imply that activities across agents will be positively correlated, that discrete decisions will be synchronized and that disturbances will be magnified and propagated. The paper shows that these implications are consistent with aggregate observations as well as some microeconomic evidence. Further, looking at certain historical episodes, such as the NIRA, as well as seasonal fluctuations provides additional support for models with macroeconomic complementarities.

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Published: Review of Economics and Statistics, vol. LXXVIII, no. 1, February 1996, pp. 78-93

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