TY  - JOUR
AU  - Caballero,Ricardo J.
AU  - Hammour,Mohamad L.
TI  - The Macroeconomics of Specificity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5757
PY  - 1996
Y2  - September 1996
UR  - http://www.nber.org/papers/w5757
L1  - http://www.nber.org/papers/w5757.pdf
N1  - Author contact info:
Ricardo J. Caballero
MIT
Department of Economics
Room E52-373a
Cambridge, MA 02142-1347
Tel: 617/253-0489
Fax: 617/253-6915
E-Mail: caball@mit.edu

Mohamad Hammour
Delta
Ecole Nornale Superieurel
48 Boulvard Jourdan
75014 Paris
FRANCE
E-Mail: hammour@DELTA.ENS.FR
AB  - Specific quasi-rents build up in a wide variety of economic relationships, and are exposed to opportunism unless fully protected by contract.  The recognition that such contracts are often incomplete has yielded major insights into the organization of microeconomic exchange.  Rent appropriation, we argue, also has important macroeconomic implications.  Resources are underutilized, factor markets are segmented, production suffers from technological with creation, recessions are excessively sharp, and expansions run into bottlenecks.  While, depending on the nature of the shock, expansions may require reinforcement or stabilization, recessions should always be softened.  In the long run, institutions, such as those governing capital-labor relations, may evolve to alleviate the problem by balancing appropriation. Technology choice will also be affected, with the appropriated factor partially appropriation   as manifested in the role capital-labor substitution played in the rise of European unemployment.
ER  -