The Sharing Economy Acts as a Shock Absorber for Business Cycles

When a recession hits and wages stagnate, millions of households quietly respond in the same way: they put their idle car on a ride-sharing platform, list a spare room on a home-sharing site, or rent out tools, bikes and equipment that would otherwise sit unused. A new economic study suggests that this behavior is not merely a coping mechanism at the individual level but a genuine macroeconomic force — one that systematically dampens the swings of the business cycle. Economists José M. Ordóñez-de-Haro and José L. Torres of the University of Málaga have built a formal model showing that the sharing economy behaves in a countercyclical fashion, expanding precisely when the traditional market economy contracts, and in doing so smoothing the aggregate fluctuations that policymakers spend so much energy trying to tame.

The research, published in the Atlantic Economic Journal, develops a dynamic stochastic general equilibrium, or DSGE, framework — the workhorse modeling tool of modern macroeconomics — that for the first time integrates a sharing sector alongside two familiar pillars of household economics: market production and home production. In the model, households own stocks of physical capital, business firms own their own capital, and the sharing sector acts as a bridge between the market and the home. Crucially, the sharing economy uses household capital — the durable goods that families already own, such as vehicles and housing — to produce tradable services that compete with or complement conventional market output. This structural feature allows the authors to trace, shock by shock, how technological improvements ripple through an economy in which households can monetize their possessions.

The model’s central mechanism rests on the productive use of idle assets, one of the defining characteristics of platforms such as Airbnb and Uber. Rather than explicitly modeling two-sided marketplaces with matching algorithms and reputation systems — a level of detail that would render the framework intractable — the authors capture the efficiency of the sharing ecosystem through a utilization rate. This parameter, they caution, should not be read as a purely technological constant. Instead, it summarizes in reduced form how effectively existing household capital is converted into productive sharing services: a high utilization rate reflects better matching technologies, lower transaction costs, stronger platform intermediation and reputation systems, and more favorable institutional conditions, while a low rate signals frictions that prevent otherwise available assets from being actively shared.

Armed with this structure, the economists subject the model economy to three distinct types of technological disturbances and observe how output, investment, hours and consumption respond. The first experiment delivers a positive neutral technological shock to market production — the kind of economy-wide productivity gain that in standard models ignites a boom. The results are striking: business investment expands, but the accumulation of household durables is crowded out. Because capital and resources flow toward the market sector, both home production and sharing output decline. In other words, even a textbook market boom carries an unseen cost for the household side of the economy, as families divert resources away from the assets that feed their own production and their sharing activity.

The second shock reverses the direction: productivity improves inside the sharing economy itself, perhaps reflecting a better platform, cheaper transactions or more efficient matching of suppliers and users. Here the reallocation runs the opposite way. Investment in durables rises, but business capital investment falls, and with it market output and market hours. Households respond to the improved returns on sharing their assets by accumulating more durables and shifting effort toward monetizing them, drawing resources away from conventional employment and firm-level investment. A genuine technological revolution in the platform economy, the model suggests, is not neutral with respect to the rest of the macroeconomy — it visibly reallocates capital and labor across the market and household boundaries.

The third and perhaps most consequential experiment involves investment-specific technological shocks to durables — improvements that make household investment goods cheaper or better, analogous to declines in the quality-adjusted price of cars, appliances or home equipment. In earlier macroeconomic research, such shocks have posed a puzzle: they expand household capital at the expense of business capital, yet they do not appear to depress effective consumption in the data. The Málaga model offers a resolution. Because household capital simultaneously feeds two channels — home production and sharing activities — the expansion of the household capital stock sustains the consumption aggregate even as business investment contracts. The sharing economy, by giving household capital a second productive outlet, helps explain why cheaper durables do not translate into a visible consumption collapse.

Taken together, these results lead the authors to their headline conclusion: the sharing economy is countercyclical. When the market economy weakens, households mitigate the downturn by monetizing their durable assets, generating sharing output precisely when market income is under pressure. This buffer smooths aggregate consumption and, by extension, the business cycle itself. The finding resonates with a growing empirical literature on platform work and peer-to-peer markets — including studies of Uber drivers showing that flexible gig work carries substantial value for workers, and analyses of Airbnb quantifying how peer entry reshapes the accommodation industry — but it elevates those micro observations to the level of aggregate dynamics, where the sharing sector emerges as an implicit stabilizer.

The policy implications are significant. Modern stabilization policy — interest rate setting, fiscal stimulus, automatic stabilizers — is calibrated almost entirely against measured market activity. GDP, as national statisticians have long acknowledged, struggles to capture home production and has an uneasy relationship with the digital economy more broadly. If a substantial fraction of household adjustment to recessions now flows through channels that official statistics barely register, then observed market downturns may overstate the true welfare losses experienced by households, and conversely, market booms may overstate welfare gains that come at the cost of household-side activity. Central bankers and finance ministries designing business cycle stabilization policies, the authors argue, need to account for the sharing economy explicitly, because it both amplifies and transmits shocks through the household capital stock in ways that conventional models simply cannot see.

The study also connects to a deeper theoretical tradition. Household production entered formal macroeconomics decades ago, in influential work showing that the allocation of capital and time between market and home activities shapes aggregate fluctuations, and that household investment displays distinctive cyclical behavior — often leading business investment over the cycle. The sharing economy adds a third vertex to this market-home geometry, transforming household durables from a purely private input into a source of tradable services. As platforms lower transaction costs and raise the utilization rate of idle assets, the boundary between household capital and productive capital blurs further. The Málaga economists’ framework provides a tractable way to think about this transformation, and their conclusion is a provocative one: the quiet decisions of millions of households to rent out what they already own may constitute one of the most underappreciated shock absorbers in the modern economy.

Subject of Research: Macroeconomic modeling of the sharing economy's role in business cycle fluctuations and household capital allocation

Article Title: Sharing Economy and Technological Shocks over the Business Cycle

Article References: Sharing Economy and Technological Shocks over the Business Cycle. (n.d.). https://doi.org/10.1007/s11293-026-09860-8

Image Credits: AI Generated

DOI: 10.1007/s11293-026-09860-8

Keywords: sharing economy, business cycle, DSGE model, household capital, durable goods, home production, technological shocks, collaborative consumption, investment-specific technology, macroeconomic stabilization, peer-to-peer markets, utilization rate