Macroeconomic implications of production bunching. Factor demand linkages

Russell W. Cooper, John C. Haltiwanger

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)107-127
Number of pages21
JournalJournal of Monetary Economics
Volume30
Issue number1
DOIs
StatePublished - Oct 1992

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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