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PRODID:-//Memento EPFL//
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SUMMARY:Labor Leverage\, Coordination Failures\, and Systematic Risk
DTSTART:20200612T103000
DTEND:20200612T120000
DTSTAMP:20260406T230156Z
UID:84d62e98916cc33c5afbe0375bc6202014bbf9305b50dcc5cde2ba5e
CATEGORIES:Conferences - Seminars
DESCRIPTION:Matthieu BOUVARD\, Toulouse School of Economics\nWe study an e
 conomy where demand spillovers make firms' production decisions strategic 
 complements. Firms choose their operating leverage trading off higher fixe
 d costs for lower variable costs. Operating leverage governs firms' exposu
 res to an aggregate labor productivity shock. In equilibrium\, firms exhib
 it excessive operating leverage as they do not internalize that an economy
  with higher aggregate operating leverage is more likely to fall into a re
 cession following a negative productivity shock. Welfare losses coming fro
 m firms' failure to coordinate production are amplified by suboptimal risk
 -taking\, which magnifies the impact of productivity shocks onto aggregate
  output.
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STATUS:CONFIRMED
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