Intermediate Goods and Business Cycles: Implications for Productivity and Welfare

No 4817, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents an aggregate demand-driven model of business cycles that provides a new explanation for the procyclicality of productivity, and simultaneously predicts large welfare losses from monetary non-neutrality. The key features of the model are an input- output production structure, imperfect competition, countercyclical markups, and, for some results, state- dependent price rigidity. True technical efficiency is procyclical even though production takes place with constant returns, without technology shocks or technological externalities. The paper has observable implications that distinguish it empirically from related work. These implications are generally supported by data from U.S. manufacturing industries.

JEL-codes: E23 E32 (search for similar items in EconPapers)
Date: 1994-08
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as American Economic Review, Vol. 85, no. 3 (1995): 512-531.

Downloads: (external link)
http://www.nber.org/papers/w4817.pdf (application/pdf)

Related works:
Journal Article: Intermediate Goods and Business Cycles: Implications for Productivity and Welfare (1995)
Working Paper: Intermediate Goods and Business Cycles: Implications for Productivity and Welfare (1993)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:4817

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w4817

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().