In this survey, we discuss the effect of macroeconomic fluctuations on long-run growth from both a theoretical and empirical perspective. We emphasize the 'opportunity cost 'approach, which states that firms will intertemporally substitute productivity-enhancing activities for regular production activity during recessions. We provide aggregate evidence in favour of the opportunity-cost approach.
ASJC Scopus subject areas
- Economics and Econometrics
- Management, Monitoring, Policy and Law