Asymmetric cycles

Boyan Jovanovic

    Research output: Contribution to journalArticlepeer-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 languageEnglish (US)
    Pages (from-to)145-162
    Number of pages18
    JournalReview of Economic Studies
    Volume73
    Issue number1
    DOIs
    StatePublished - Jan 2006

    ASJC Scopus subject areas

    • Economics and Econometrics

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