Learning by doing, organizational forgetting, and the business cycle

Anelí Bongers

Bulletin of Economic Research, 2023, vol. 75, issue 1, 141-150

Abstract: This paper supplements a learning‐by‐doing real business cycle model with endogenous organizational forgetting. Empirical evidence shows that the accumulated experience decay rate is not constant over the business cycle, but that forgetting is a function of economic activity. Learning reinforces the effects of productivity shocks, and organizational forgetting exacerbates their impact and increases their persistence. This is of particular interest when a negative productivity shock hits the economy, as the increasing speed of forgetting aggravates the negative shock and delays recovery.

Date: 2023
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https://doi.org/10.1111/boer.12346

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Persistent link: https://EconPapers.repec.org/RePEc:bla:buecrs:v:75:y:2023:i:1:p:141-150

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