“The Return on Capital in Disaggregated Economies: Theory and Measurement” draft (with Julia Faltermeier and Sampreet Goraya) New!!We develop a dynamic general equilibrium model for disaggregated economies with heterogeneous firms and flexible demand and production functions. The model yields a non-parametric, closed-form decomposition of the aggregate return on capital into the risk-free rate and firm-level markups, risk premia, and capital frictions. Applied to U.S. data, we find that, once profits are accounted for, the true return on capital declined from 9% to 5% since 1982, yet remains above the risk-free rate. Capital frictions, particularly among newer cohorts of intangible-intensive firms, are the main barrier preventing convergence. Eliminating them would raise aggregate productivity by 2–13%. "Unemployed Capital in Space" draft (joint with Charles Cheng Zhang) New substantially updated version!!This paper examines search-and-matching frictions in local capital markets. Leveraging a unique dataset we highlight a novel fact: spatial capital unemployment rate differences are persistent and mostly driven by different separation rates between capital and firms across locations. We show that a spatial search-and-matching model can fully account quantitatively for this observation. The social planner allocation does not coincide with the decentralized equilibrium and yields potentially sizeable welfare gains, providing a rationale for place-based policies. "Climate Change, Firms, and Aggregate Productivity" CEPR WP, draft (joint with Andrea Caggese, Sampreet Goraya, and Carolina Villegas-Sanchez)This paper employs a general equilibrium framework to analyze how temperature affects firm-level demand, productivity, and input allocative efficiency, informing aggregate productivity damages due to climate change. Using data from Italian firms and detailed climate data, it uncovers a sizeable negative effect of extreme temperature on firm-level productivity and revenue-based marginal product of capital. Based on these estimates, the model generates aggregate productivity losses higher than previously thought, ranging from 0.60 to 6.82 percent depending on the scenario and the extent of adaptation. Additionally, climate change exacerbates Italian regional disparities. "Customer Accumulation, Returns to Scale, and Secular Trends" draft, appendix (previously circulated as "The Macroeconomics of Rising Returns to Scale: Customer Acquisition, Markups, and Dynamism") - R&R at Journal of Monetary Economics Awarded Best Job Market Paper by the European Economic Association and Unicredit FoundationWhile various secular trends have unfolded in the US in the last decades, returns to scale in production have increased. This paper links these observations by introducing a novel model of realistic customer accumulation based on directed search in the product market. Higher returns to scale yield a competitive advantage to larger firms, giving rise to superstar firms taking over customer competition. This makes markets less contestable by new entrants and quantitatively explains a substantial fraction of several US trends. Additionally, the micro-level channels through which the model explains these trends are consistent with empirical observations. "The Rise of Intangible Capital and the Macroeconomic Implications" draft, appendix (joint with Sampreet Goraya) - R&R at American Economic Journal: MacroeconomicsWe document a technological change in production technology biased towards intangible capital, such as computerized information and software, over other inputs in the last three decades. This has led to higher investment adjustment costs for firms. A general equilibrium firm dynamics model suggests that this can result in (i) increased firm size and concentration, (ii) changes in aggregate factor shares, and (iii) rise in dispersion of total factor productivity revenue coupled with declining aggregate productivity. This paper provides an alternative mechanism behind these macroeconomic changes in the US economy, emphasizing the efficient response of firms to changes in production technology. "Heterogeneous Markups Cyclicality and Monetary Policy" draft (joint with Marta Morazzoni and Danila Smirnov) - R&R at International Economic ReviewThis paper revisits the question on the conditional cyclicality of the aggregate markup using a micro-to-macro approach, which highlights the role of firm-level heterogeneous cyclicality, the reallocation of economic activity across firms, and aggregation methods. Using US firm-level data from 1990 to 2016, we find that young firms have procyclical markups conditional on monetary shocks, while older firms show countercyclical markups. Moreover, economic activity reallocates from old to young firms after monetary shocks. Aggregating these responses, we find that the aggregate markup is countercyclical to monetary shocks. Over time, firm aging has changed the distribution of firms, altering the aggregate markup cyclicality, which help reconcile part of the conflicting findings in the literature. "Heterogeneous Effects of Weather Shocks on Firm Economic Performance" slides (by Romano Tarsia)"How do Firms Build Market Share?" slides (by David Argente, Doireann Fitzgerald, Sara Moreira, and Anthony Priolo)