The workweek of capital and its cyclical implications

https://doi.org/10.1016/0304-3932(88)90035-9Get rights and content

Abstract

The neoclassical growth model studied in the Kydland and Prescott ‘Time to Build’ paper is modified to permit the capital utilization rate to vary. The effect of this modification is to increase the amplitude of the aggregate fluctuations predicted by theory as the equilibrium response to technological shocks. If, following Solow, the changes in output not accounted for by changes in the labor and tangible capital inputs are interpreted as being the technology shocks, the statistical properties of the fluctuations in the postwar United States economy are close in magnitude and nature to those predicted by theory.

References (16)

  • F.E. Kydland

    Labor-force heterogeneity and the business cycle

    Carnegie-Rochester Conference Series on Public Policy

    (1984)
  • A. Mas-Colell

    A model of equilibrium with differentiated commodities

    Journal of Mathematical Economics

    (1975)
  • E.C. Prescott

    Theory ahead of business-cycle measurement

    Carnegie-Rochester Conference Series on Public Policy

    (1986)
  • G. Debreu

    Valuation equilibrium and Pareto optimum

    Proceedings of the National Academy of Sciences

    (1954)
  • G.R. Ghez et al.

    The allocation of time and goods over the life cycle

    (1975)
  • G. Hansen

    Fluctuations in total hours worked: A study using efficiency units

  • V.J. Hotz et al.

    Intertemporal preferences and labor supply

  • L.E. Jones

    A competitive mode of commodity differentiation

    Econometrica

    (1984)
There are more references available in the full text version of this article.

Cited by (0)

We thank Antonio Borges, Kevin Cotter, Rodolfo Manuelli, John Shoven, and Charles Whiteman for helpful comments and the national Science Foundation and the Minneapolis Federal Reserve Bank for financial support. Any views expressed are our own.

View full text