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Asymmetric Cycles

  • Boyan Jovanovic

I estimate a model in which new technology entails random adjustment costs. Rapid adjustments may cause productivity slowdowns. These slowdowns last longer when retooling is costly. The model explains why growth-rate disasters are more likely than miracles, and why volatility of growth relates negatively to growth over time. I estimate the model, and the estimates have surprising implications. Firms seem to abandon technologies long before they are perfected current-practice TFP is 17 percent below best-practice.

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File URL: http://www.nber.org/papers/w10573.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10573.

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Date of creation: Jun 2004
Date of revision:
Publication status: published as Jovanovic, Boyan. "Asymmetric Cycles," Review of Economic Studies, 2006, v73(1,Jan), 145-162.
Handle: RePEc:nbr:nberwo:10573
Note: EFG PR
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Web page: http://www.nber.org
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