The paper studies how merger and acquisition (M&A) affects the aggregate growth rate with an endogenous growth model. We model M&A as a capital reallocation process which can increase both the productivity and growth rates of firms. The model is tractable and largely consistent with patterns observed in M&A at the micro level. Matching our model to the data, we find that prohibiting M&A would reduce the aggregate growth rate of the US by 0.8% and would reduce aggregate TFP by 10%. We use our model to address the M&A boom that began in the 1990s. The model implies that this boom could increase the aggregate growth rate by 0.2%. We find 18% of the increased M&A can be explained by a technological change that reduced the costs of M&A.

I consider a New Keynesian model of a small open economy where international financial markets are imperfect and the exchange rate is determined by capital flows. I use this framework to analyze the effects of capital flow shocks and study optimal foreign exchange intervention. Capital inflows (outflows) appreciate (depreciate) the exchange rates and cause economic disruption. Currency misalignments take the form of a time-varying wedge between domestic consumption and the real exchange rate. The optimal foreign exchange intervention “leans against the wind” and mitigate real exchange rate volatility. Consistent with the recent empirical evidence, the use of foreign exchange intervention is driven by the objective of macroeconomic stabilization rather than by mercantilist motive. Monetary policy cannot correct currency misalignments since it can only move exchange rates and domestic consumption in the same direction. Thus, any attempt to stabilize foreign demand has adverse effects on domestic inflation. In dealing with capital flow shocks, currency intervention should be the main tool while monetary policy should play a supplementary role.

同系列，以前的帖子：

Columbia 2014 Job Market Paper

https://bbs.pinggu.org/thread-3496806-1-1.html

UC Davis 2014Job Market Paper
https://bbs.pinggu.org/thread-3495417-1-1.html

Yale 2014 Job Market Paper
https://bbs.pinggu.org/thread-3494168-1-1.html

Stanford 2014 Job Market Paper
https://bbs.pinggu.org/thread-3491842-1-1.html

Princeton 2014 Job Market Paper
https://bbs.pinggu.org/thread-3494070-1-1.html