TY - JOUR
T1 - Macroeconomic implications of production bunching. Factor demand linkages
AU - Cooper, Russell W.
AU - Haltiwanger, John C.
N1 - Funding Information:
*A version of this paper was presented at the 1988 NBER Summer Institute sleeting of the Coordination Failures group and at the 1989 NBER Economic Fluctuations meeting at Stanford University. We thank seminar participants at those meetings as well as Robert Hall and Thomas Sargent for helpful conversations leading to this paper and-Marc Dudey. James Kahn. and Kevin Murphy for helpful comments on an earlier draft of this paper. Referees provided helpful comments and criticisms as well. Cooper thanks the National Science Foundation, the Hoover Institution, and the University of Iowa for financial assistance. Haltiwanger thanks the National Science Foundation and the University of Maryland for financial support.
PY - 1992/10
Y1 - 1992/10
N2 - Existing empirical evidence suggests that output is more variable than consumption so that production smoothing is not apparently present. In this paper, we investigate some macroeconomic implications of the proposition that the empirical evidence reflects the presence of some firms in the economy that produce with nonconvex technologies. Overall, when activities are sufficiently complementary and inventory holding is sufficiently costly, nonconvexities at the firm level can generate a pattern of output and sales such that the variance of output exceeds that of sales at an aggregate level. In this way, nonconvexities at the individual firm level may have macroeconomic consequences.
AB - Existing empirical evidence suggests that output is more variable than consumption so that production smoothing is not apparently present. In this paper, we investigate some macroeconomic implications of the proposition that the empirical evidence reflects the presence of some firms in the economy that produce with nonconvex technologies. Overall, when activities are sufficiently complementary and inventory holding is sufficiently costly, nonconvexities at the firm level can generate a pattern of output and sales such that the variance of output exceeds that of sales at an aggregate level. In this way, nonconvexities at the individual firm level may have macroeconomic consequences.
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U2 - 10.1016/0304-3932(92)90047-6
DO - 10.1016/0304-3932(92)90047-6
M3 - Article
AN - SCOPUS:0009363623
VL - 30
SP - 107
EP - 127
JO - Carnegie-Rochester Confer. Series on Public Policy
JF - Carnegie-Rochester Confer. Series on Public Policy
SN - 0304-3932
IS - 1
ER -