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How do firms adjust production factors to the cycle?

Listed author(s):
  • Cette Gilbert

    (Banque de France, Université Aix-Marseille (Aix-Marseille School of Economics), CNRS et EHESS, Paris, France)

  • Lecat Rémy

    ()

    (Banque de France – 39, rue Croix-des-Petits-Champs – 75001, Paris, France)

  • Ahmed Jiddou Ahmed Ould

    (Banque de France and ENSAE, Paris, France)

This paper studies the adjustment of production factors to the cycle taking into account factor utilization in multiple dimensions (labor working time, capital operating time and capital capacity utilization) and examines the impact of obstacles to increasing capital operating time on this adjustment path. Factor utilization adjusts the most rapidly, first through capital capacity utilization and capital operating time and then labor working time. The adjustment is slow for the number of employees and even slower for the capital stock. Obstacles to increasing capital operating time lead to a slower adjustment of capital operating time, offset by a stronger adjustment of capacity utilization.

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File URL: https://www.degruyter.com/view/j/bejm.2016.16.issue-2/bejm-2014-0099/bejm-2014-0099.xml?format=INT
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Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 16 (2016)
Issue (Month): 2 (June)
Pages: 361-394

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Handle: RePEc:bpj:bejmac:v:16:y:2016:i:2:p:361-394:n:1
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References listed on IDEAS
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  1. Gilbert Cette & Nicolas Dromel & Rémy Lecat & Anne-Charlotte Paret, 2015. "Production Factor Returns: The Role of Factor Utilization," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 134-143, March.
  2. Joe Mattey & Steven Strongin, 1997. "Factor utilization and margins for adjusting output: evidence from manufacturing plants," Economic Review, Federal Reserve Bank of San Francisco, pages 3-17.
  3. Nadiri, M Ishaq & Rosen, Sherwin, 1969. "Interrelated Factor Demand Functions," American Economic Review, American Economic Association, vol. 59(4), pages 457-471, Part I Se.
  4. Gilbert Cette & Christian Clerc & Lea Bresson, 2015. "Contribution of ICT Diffusion to Labour Productivity Growth: The United States, Canada, the Eurozone, and the United Kingdom, 1970-2013," International Productivity Monitor, Centre for the Study of Living Standards, vol. 28, pages 81-88, Spring.
  5. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
  6. Yuriy Gorodnichenko & Matthew Shapiro, 2011. "Using the Survey of Plant Capacity to Measure Capital Utilization," Working Papers 11-19, Center for Economic Studies, U.S. Census Bureau.
  7. Gilbert Cette & Jimmy Lopez, 2012. "ICT demand behaviour: an international comparison," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(4), pages 397-410, June.
  8. Gilbert Cette & Nicolas Dromel & Rémy Lecat & Anne-Charlotte Paret, 2015. "Production Factor Returns: The Role of Factor Utilization," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 134-143, March.
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