Simone Lenzu

Economists have long hypothesized that firm’s spatial proximity may generate productivity spillovers. How large are externalities & how broad is their reach? New insights in our new ECMA paper: role of firms’ plant-level networks & industrial policy 🚨 #econtwitter @ecmaEditors

Congrats @t_holden . Great paper!

Our model, estimated to match the reduced-form estimates, suggests the second effect dominates, so the aggregate (!) gains are greatest if the plant opens in a well-developed regions. More in the paper! pages.stern.nyu.edu/~slenzu/Papers…

On the other hand, due to global knowledge sharing, the impact on the rest of the economy is greater if the plant opens in a well-developed region, which is connected to other regions through plant-level (knowledge-sharing) networks.

Economists have long hypothesized that firm’s spatial proximity may generate productivity spillovers. How large are externalities & how broad is their reach? New insights in our new ECMA paper: role of firms’ plant-level networks & industrial policy 🚨 #econtwitter @ecmaEditors

Econometrica Volume 92, Issue 5 (September 2024) is now online econometricsociety.org/publications/e…

The presentation is on Wednesday, July 10 at 12:00. Thanks for reading and looking forward to seeing you there! 14/14

Finally, we propose a “Nonlinear Calvo model” embedding nonlinearities in a tractable framework. Combines Caballero-Engel's inflation formula, quadratic hazard function, Calvo-like reset price equation. It has an analytical solution for inflation! 12/14

Quantitative exercise: Construct a measure of aggregate marginal cost and feed it into the model as a sequence of impulse responses. The menu-cost model captures well both amplitude and cyclicality of inflation, in both high and low inflation regimes. 10/14

Micro fact #3) At the firm level, prices are nonlinear in reset gaps, leading to a steeper slope of the NKPC when the distribution of gaps shifts. 8/14

Micro-to-macro fact #4) The nonlinearities at the firm level result in a nonlinear relation between aggregate inflation and aggregate frequency. 9/14