Can Intangible Capital Explain Cyclical Movements in the Labor Wedge?

Francois Gourio and Leena Rudanko

No 19900, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Intangible capital is an important factor of production in modern economies that is generally neglected in business cycle analyses. We demonstrate that intangible capital can have a substantial impact on business cycle dynamics, especially if the intangible is complementary with production capacity. We focus on customer capital: the capital embodied in the relationships a firm has with its customers. Introducing customer capital into a standard real business cycle model generates a volatile and countercyclical labor wedge, due to a mismeasured marginal product of labor. We also provide new evidence on cyclical variation in selling effort to discipline the exercise.

JEL-codes: E13 E32 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Note: EFG ME
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Citations: View citations in EconPapers (19)

Published as Fran?ois Gourio & Leena Rudanko, 2014. "Can Intangible Capital Explain Cyclical Movements in the Labor Wedge?," American Economic Review, American Economic Association, vol. 104(5), pages 183-88, May.

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Journal Article: Can Intangible Capital Explain Cyclical Movements in the Labor Wedge? (2014)
Working Paper: Can Intangible Capital Explain Cyclical Movements in the Labor Wedge? (2014)
Working Paper: Can Intangible Capital Explain Cyclical Movements in the Labor Wedge? (2014)
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