Asymmetric cycles

Boyan Jovanovic

doi:10.1111/j.1467-937X.2006.00372.x

Asymmetric cycles

Boyan Jovanovic

Research output: Contribution to journal › Article › peer-review

Abstract

I estimate a model in which new technology entails random adjustment needs. Rapid adjustments may cause measured productivity to decline. The slow-downs 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% of output and technological inefficiency to about 28%. Firms abandon technologies long before they are perfected - current practice total factor productivity (TFP) is 20% below its maximal level.

Original language	English (US)
Pages (from-to)	145-162
Number of pages	18
Journal	Review of Economic Studies
Volume	73
Issue number	1
DOIs	https://doi.org/10.1111/j.1467-937X.2006.00372.x
State	Published - Jan 2006

ASJC Scopus subject areas

Economics and Econometrics

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10.1111/j.1467-937X.2006.00372.x

Cite this

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author = "Boyan Jovanovic",

note = "Funding Information: Acknowledgements. I would like to thank G. Barlevy, S. Braguinsky, X. Chen, J. Greenwood, J. Imbs, A. Jao, P. Krusell, L. Veldkamp, and G. Violante for comments, and the NSF (Grant No. 0241350) for support. Thanks to J. Glachant for comments and to A. Gavazza for doing the estimation and correcting many errors. A special thanks to P. F{\`e}ve for his helpful discussion at the 2003 Toulouse Macroeconomics Conference. Copyright: Copyright 2008 Elsevier B.V., All rights reserved.",

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Asymmetric cycles

Abstract

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