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The Aggregate Implications of Machine Replacement: Theory and Evidence

Listed author(s):
  • Russell Cooper
  • John Haltiwanger

This paper studies an economy in which producers must incur resource costs to replace depreciated machines. The process of costly replacement and depreciation creates endogenous fluctuations in productivity, employment and output of a single producer. We also explore the spillover effects of machine replacement by multiple, independent producers. The implications of our model are generally consistent with observed monthly output and productivity fluctuations in automobile plants and with monthly variations in employment and production in the manufacturing sector.

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File URL: http://www.nber.org/papers/w3552.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3552.

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Date of creation: Dec 1990
Publication status: published as American Economic Review, Vol. 83, No. 3, pp. 360-382 (June 1993).
Handle: RePEc:nbr:nberwo:3552
Note: EFG
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