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THE AGGREGATE IMPLICATIONS OF MACHINE REPLACEMENT: THEORY AND EVIDENCE

John Haltiwanger and Russell Cooper

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: This paper studies an economy in which producers incur resource costs to replace depreciated machines. The process of costly replacement and depreciation creates endogenous fluctuations in productivity, employment and output of a single producer. We also explore the spillover effects of machine replacement on other sectors of the economy and provide conditions for synchronized machine replacement by multiple, independent producers. The implications of our model are generally consistent with observed monthly output, employment and productivity fluctuations in automobile plants. Synchronization of retooling across plants within the auto industry is widespread so that the fluctuations observed at the plant level have aggregate implications.

Keywords: CES; economic; research; micro; data; microdata; chief; economist (search for similar items in EconPapers)
Date: 1992-10
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https://www2.census.gov/ces/wp/1992/CES-WP-92-12.pdf (application/pdf)

Related works:
Journal Article: The Aggregate Implications of Machine Replacement: Theory and Evidence (1993) Downloads
Working Paper: The Aggregate Implications of Machine Replacement: Theory and Evidence (1990) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:92-12

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