Review of Economic Studies Vol. 73 No. 1 2006
Asymmetric Cycles
Abstract
I estimate a model in which new technology entails random adjustment needs. Rapid adjustments may cause measured productivity to decline. The slowdowns persist because adjustment is costly and, hence, protracted. The model explains both the “steepness ” and the “deepness ” asymmetry of cycles. Adjustment costs amount to about 14 percent of output, and technological inefficiency to about 28 percent. Firms abandon technologies long before they are perfected — current-practice TFP is 20 percent below its maximal level.
- DOI
- 10.1111/j.1467-937x.2006.00372.x
- Volume
- 73
- Issue
- 1
- Pages
- 145-162
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref