@article{7bb2455634d34f848fdb458fc436a829,
title = "Sectoral shocks, learning, and aggregate fluctuations",
abstract = "We present a model in which sectoral shocks have aggregate consequences. The model relies on irreversible investment and imperfect information to slow the adjustment of expanding industries. We show that this gradual expansion is sub-optimal.",
author = "Andrew Caplin and John Leahy",
note = "Funding Information: These two criteria imply that the social planner invests to the point at which either the true marginal cost is discovered or price is equal to x. Since delay only involves the cost of discounting, this investment will take place as soon as possible. Any bounded rate of entry, allows the social planner to observe the production decisions of active firms. The limit strategy involving immediate investment, however, is informationally infeasible; the planner could not stop entry when the price was equal to c. The steady-state distribution of the theorem arises as the limit of s-optimal strategies. II Acknowledgements. We would like to thank Ioannis Karatzas and two anonymous referees for helpful comments, and the National Science Foundation for financial support. Copyright: Copyright 2016 Elsevier B.V., All rights reserved.",
year = "1993",
month = oct,
doi = "10.2307/2298099",
language = "English (US)",
volume = "60",
pages = "777--794",
journal = "Review of Economic Studies",
issn = "0034-6527",
publisher = "Oxford University Press",
number = "4",
}