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Implementation Cycles in the New Economy

Author

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  • Pasquale Scaramozzino
  • Jonathan Temple
  • Nir Vulkan

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Abstract

The economic boom of the USA in the 1990s was remarkable in its duration, the sustained rise in equipment investment, the reduced volatility of productivity growth, and continued uncertainty about the trend growth rate. In this paper we link these phenomena using an extension of the classic model of implementation cycles due to Shleifer (1986). The key idea is that uncertainty about the trend growth rate can lead firms to bring forward the implementation of innovations, temporarily eliminating expectations-driven business cycles, because delay is risky when beliefs are not common knowledge.

Suggested Citation

  • Pasquale Scaramozzino & Jonathan Temple & Nir Vulkan, 2005. "Implementation Cycles in the New Economy," Bristol Economics Discussion Papers 05/569, Department of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:05/569
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    References listed on IDEAS

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    6. Shleifer, Andrei, 1986. "Implementation Cycles," Journal of Political Economy, University of Chicago Press, vol. 94(6), pages 1163-1190, December.
    7. Pasquale Scaramozzino & Nir Vulkan, 2004. "Uncertainty and Endogenous Selection of Economic Equilibria," Metroeconomica, Wiley Blackwell, vol. 55(1), pages 22-40, February.
    8. Kiminori Matsuyama, 1995. "Complementarities and Cumulative Processes in Models of Monopolistic Competition," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 701-729, June.
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    Cited by:

    1. Francois Patrick & Lloyd-Ellis Huw, 2013. "Implementation cycles, growth and the labor market," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 1-43, July.

    More about this item

    Keywords

    Implementation cycles; New Economy; multiple equilibria.;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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