NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Dynamic Complementarities: A Quantitative Analysis

Russell Cooper, Alok Johri

NBER Working Paper No. 5691
Issued in July 1996
NBER Program(s):   EFG

This paper considers the importance of dynamic complementarities as an endogenous source of propagation in a dynamic stochastic economy. Dynamic complementarities link the stocks of human and organizational capital, which are influenced by past levels of economic activity, to current levels of productivity. We supplement an otherwise standard dynamic business cycle model with both contemporaneous and dynamic complementarities. The model is calibrated using estimates of these effects. Our quantitative analysis identifies empirically relevant dynamic complementarities as a source of propagation for both technology and taste shocks.

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Document Object Identifier (DOI): 10.3386/w5691

Published: Cooper, Russel W. and Alok Johri. "Dynamic Complementarities: A Quantitative Analysis," Journal of Monetary Economics, 1997, v40(1,Sep), 97-119.

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