Capital operating time and economic fluctuations

Martial Dupaigne

No 1998031, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Acknowledging that changes in factor utilization rates explain variations in factor productive services flows, this paper investigates a dynamic general equilibrium model incorporating quasi-fixed inputs, weak complementarity between capital and labour, and displaying variations in the following three margins : (i) individual hours, (ii) aggregate employment and (iii) the workweek of capital. Both instantaneous amplifications of shocks and mid-term persistence are substantially magnified, witnessing much richer propagation mechanisms. This high persistence does not entirely rely on assumptions regarding adjustment of employment, but, on the contrary, on faster capital accumulation enabled by large increases in output due to periods of high factor utilization.

JEL-codes: E22 E32 (search for similar items in EconPapers)
Pages: 25
Date: 1998-09-01
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Citations: View citations in EconPapers (3)

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