The behaviour of productivity growth rates and price-cost margins during contractions and expansions
Panel data on thirteen two-digit US manufacturing industries were analysed using a random coefficients approach to determine the behaviour of total factor productivity growth rates and price—marginal cost ratios during recessions and expansions. Results show: (1) productivity growth is procyclical—it decreases during recessions and increases during expansions. In addition, the decrease during recessions is greater than the increase during expansions; (2) the price-marginal cost ratio is very asymmetric — it decreases during recessions but shows no significant movement during an expansion. The lower price-marginal cost ratio during a recession implies that the elasticity of output with respect to labour decreases. Thus not only does the level of productivity fall, but the productivity of labour relative to capital also falls. These characteristics are consistent with labour hoarding.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 29 (1997)
Issue (Month): 7 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RAEC20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RAEC20|