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| Author: | Burnside, C. Eichenbaum, M. |
| Title: | Factor-hoarding and the propagation of business-cycle shocks |
| Journal: | American Economic Review
1996 : DEC, VOL. 86:5, p. 1154-1174 |
| Index terms: | ECONOMICS AMERICA BUSINESS CYCLES |
| Language: | eng |
| Abstract: | This paper analyzes the role of variable capital-utilization rates in propagating shocks over the business cycle. The model on which the analysis here is based treats variable capital-utilization rates as a form of factor-hoarding. The authors argue that variable capital-utilization rates are a quantitatively important source of propagation to business-cycle shocks. With this additional source of propagation, the volatility of exogenous technology shocks needed to explain the observed variability in aggregate U.S. output is significantly reduced relative to standard real-business-cycle models. |
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