{"title":"Reallocating and Pricing Illiquid Capital: Two Productive Trees","authors":"Janice Eberly, Neng Wang","doi":"10.1111/iere.70027","DOIUrl":"https://doi.org/10.1111/iere.70027","url":null,"abstract":"<div>\u0000 \u0000 <p>We develop a two-sector general-equilibrium model with capital accumulation and convex adjustment costs to analyze sectoral capital reallocation and asset pricing. Consumers weigh the diversification benefits of spreading investment across sectors against the productivity gains of concentrating capital in the more productive sector. We derive conditions under which sectoral capital reallocation shapes both sectoral and aggregate outcomes. Our framework highlights the importance of heterogeneity and capital liquidity—the ease of reallocating capital—in driving growth and asset prices, and uncovers a fundamental trade-off: while diversification enhances risk sharing, reallocation may dampen aggregate growth.</p></div>","PeriodicalId":48302,"journal":{"name":"International Economic Review","volume":"66 5","pages":"1887-1907"},"PeriodicalIF":1.3,"publicationDate":"2025-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145695499","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Discussion of “Reallocating and Pricing Illiquid Capital: Two Productive Trees”","authors":"Kai Li","doi":"10.1111/iere.70030","DOIUrl":"https://doi.org/10.1111/iere.70030","url":null,"abstract":"<div>\u0000 \u0000 <p>This discussion of “Reallocating and Pricing Illiquid Capital: Two Productive Trees” by Janice Eberly and Neng Wanghighlights its tractable two-sector model with costly capital reallocation, which links diversification benefits, adjustment frictions, and asset pricing. I outline four promising directions for future research: quantifying the diversification–friction trade-off, exploring business cycle and asset pricing dynamics, examining growth under uncertainty, and connecting to the capital reallocation literature with state-dependent frictions. The model framework provides a clear and versatile framework that can guide both theoretical advances and empirical work on capital allocation, risk premia, and macro-financial dynamics.</p></div>","PeriodicalId":48302,"journal":{"name":"International Economic Review","volume":"66 5","pages":"1909-1911"},"PeriodicalIF":1.3,"publicationDate":"2025-09-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145695325","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Comment on “Inflation and Debt Rollover Under Low Interest Rates”","authors":"Zhiwei Xu","doi":"10.1111/iere.70033","DOIUrl":"https://doi.org/10.1111/iere.70033","url":null,"abstract":"","PeriodicalId":48302,"journal":{"name":"International Economic Review","volume":"66 5","pages":"1809-1811"},"PeriodicalIF":1.3,"publicationDate":"2025-09-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145695323","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}