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Organizational Capital, Learning-by-Doing and Investment Volatility

  • Fabiano Rodrigues Bastos

    (Universidade de Brasília)

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    This paper addresses the issue of plant-level investment volatility in the context of a purely convex model, where fluctuations are driven by technological shocks. The aim is to assess the role of learning-by-doing in reproducing the well-documented non-smooth investment dynamics at the plant-level, instead of relying on typical non-convexities (fixed costs or indivisibilities) used to account for lumpy investment behavior. The concept of organizational capital is essential in the analysis, and it provides the channel through which learning affects production. Our results indicate that learning-by-doing constitutes a potentially important source of investment volatility at the plant-level, and that one should not believe that convex models of investment necessarily deliver smooth dynamics.

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    File URL: http://www.anpec.org.br/revista/vol8/vol8n3p463_475.pdf
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    Article provided by ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics] in its journal Economia.

    Volume (Year): 8 (2007)
    Issue (Month): 3 ()
    Pages: 463–475

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    Handle: RePEc:anp:econom:v:8:y:2007:i:3:p:463-475
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    1. Jovanovic, Boyan & Nyarko, Yaw, 1996. "Learning by Doing and the Choice of Technology," Econometrica, Econometric Society, vol. 64(6), pages 1299-1310, November.
    2. Parente Stephen L., 1994. "Technology Adoption, Learning-by-Doing, and Economic Growth," Journal of Economic Theory, Elsevier, vol. 63(2), pages 346-369, August.
    3. Plutarchos Sakellaris, 2001. "Patterns of plant adjustment," Finance and Economics Discussion Series 2001-05, Board of Governors of the Federal Reserve System (U.S.).
    4. Mark E. Doms & Timothy Dunne, 1998. "Capital Adjustment Patterns in Manufacturing Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 409-429, April.
    5. C. Lanier Benkard, 2000. "Learning and Forgetting: The Dynamics of Aircraft Production," American Economic Review, American Economic Association, vol. 90(4), pages 1034-1054, September.
    6. Russell Cooper & Alok Johri, 1999. "Learning by Doing and Aggregate Fluctuations," NBER Working Papers 6898, National Bureau of Economic Research, Inc.
    7. Russell W. Cooper & John C. Haltiwanger, 2000. "On the Nature of Capital Adjustment Costs," NBER Working Papers 7925, National Bureau of Economic Research, Inc.
    8. Andrew Atkeson & Patrick J. Kehoe, 2002. "Measuring Organization Capital," NBER Working Papers 8722, National Bureau of Economic Research, Inc.
    9. Rosen, Sherwin, 1972. "Learning by Experience as Joint Production," The Quarterly Journal of Economics, MIT Press, vol. 86(3), pages 366-82, August.
    10. Ricardo J. Caballero & Eduardo M. R. A. Engel & John C. Haltiwanger, 1995. "Plant-Level Adjustment and Aggregate Investment Dynamics," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 1-54.
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