Can Intangible Capital Explain Cyclical Movements in the Labor Wedge?

Leena Rudanko
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Leena Rudanko: Boston University

No 149, 2014 Meeting Papers from Society for Economic Dynamics

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.

Date: 2014
New Economics Papers: this item is included in nep-dge, nep-mac and nep-soc
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Citations: View citations in EconPapers (12)

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Related works:
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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Persistent link: https://EconPapers.repec.org/RePEc:red:sed014:149

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