How do firms adjust production factors to the cycle?

Gilbert Cette, Rémy Lecat and Ahmed Jiddou Ahmed Ould
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Ahmed Jiddou Ahmed Ould: Banque de France and ENSAE, Paris, France

The B.E. Journal of Macroeconomics, 2016, vol. 16, issue 2, 361-394

Abstract: This paper studies the adjustment of production factors to the cycle taking into account factor utilization in multiple dimensions (labor working time, capital operating time and capital capacity utilization) and examines the impact of obstacles to increasing capital operating time on this adjustment path. Factor utilization adjusts the most rapidly, first through capital capacity utilization and capital operating time and then labor working time. The adjustment is slow for the number of employees and even slower for the capital stock. Obstacles to increasing capital operating time lead to a slower adjustment of capital operating time, offset by a stronger adjustment of capacity utilization.

Keywords: factor utilization; production function; rigidities (search for similar items in EconPapers)
JEL-codes: D24 E22 O43 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: How do firms adjust production factors to the cycle? (2016)
Working Paper: How do firms adjust production factors to the cycle? (2014)
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DOI: 10.1515/bejm-2014-0099

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