Intermediate Goods and Business Cycles: Implications for Productivity and Welfare / Susanto Basu.

Format:

Book

Author/Creator:

Basu, Susanto.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4817.

NBER working paper series no. w4817

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Intermediate Goods and Business Cycles

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1994.

Summary:

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.

Notes:

Print version record

August 1994.