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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, School of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:05/569
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    References listed on IDEAS

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    5. Shleifer, Andrei, 1986. "Implementation Cycles," Journal of Political Economy, University of Chicago Press, vol. 94(6), pages 1163-1190, December.
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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.
    2. Piersanti, Giovanni, 2012. "The Macroeconomic Theory of Exchange Rate Crises," OUP Catalogue, Oxford University Press, number 9780199653126.

    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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