Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-24T12:55:57.606Z Has data issue: false hasContentIssue false
  • English
  • Français

Capital operating time and economic fluctuations

Published online by Cambridge University Press:  17 August 2016

Martial Dupaigne
Martial Dupaigne*
Affiliation:
MAD, Université de Paris I, Maison des Sciences Économiques
Get access

Summary

Acknowledging that changes in factor utilization rates explain variations in factor productive services flows, this paper investigates a dynamic general equilibrium model incorporating quasi-fixed inputs, weak complementarity between capital and labour, and displaying variations in the following three margins: (i) individual hours, (ii) aggregate employment and (iii) the workweek of capital. Both instantaneous amplification of shocks and mid-term persistence are substantially magnified, witnessing much richer propagation mechanisms. This high persistence does not entirely rely on assumptions regarding adjustment of employment, but, on the contrary, on faster capital accumulation enabled by large increases in output due to periods of high factor utilization.

Résumé

Résumé

De maniäre à expliquer l'évolution conjoncturelle des services productifs des facteurs par les variations de leurs taux d'utilisation, le modèle dynamique d'équilibre général étudié dans cet article décrit des facteurs de production quasi-fixes et faiblement complémentaires; il présente des variations aussi bien de l'horaire individuel de travail et la durée d'utilisation des équipements que de l'emploi total. Ces caractéristiques permettent d'enrichir considérablement le mécanisme de propagation des chocs, comme en témoignent l'amplification des réponses aux chocs et l'augmentation substantielle de la persistance de moyen terme. Cette persistence élevée ne s'explique pas uniquement par les hypothäses concernant l'ajustement de l'emploi, mais également par l'accumulation très rapide du capital durant les périodes d'utilisation intensive.

Keywords

E22E32E22E32
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 64 , Issue 3 , 1998 , pp. 243 - 267
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1998 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

(*)

I thank P.-Y. Hénin and an anonymous referee for their suggestions, and F. Collard, F. Langot, M. Pucci and J-M. Talion for their valuable help. I am particularly indebted to X. Fairise. All remaining errors are mine.

References

Bils, M. and Cho, J-O. [1994], Cyclical factor utilization, Journal of Monetary Economics, 33(2), pp. 319–354.Google Scholar
Burnside, C. [1997], Depreciation in use, shifts and the workweek of capital, The World Bank, mimeo.Google Scholar
Burnside, C. and Eichenbaum, M. [1996], Factor hoarding and the propagation of business cycle shocks, The American Economic Review, 86(5), pp. 1154–1176.Google Scholar
Burnside, C., Eichenbaum, M. and Rebelo, S. [1993], Labor hoarding and the business cycle, Journal of Political Economy, 101(2), pp. 245–273.Google Scholar
Burnside, C., Eichenbaum, M. and Rebelo, S. [1995], Capital utilization and returns to scale, NBER, Working Paper n° 5125.Google Scholar
Cho, J-O. and Cooley, T.F. [1994], Employment and hours over the business cycle, Journal of Economics Dynamics and Control, 18(2), pp. 411–432.Google Scholar
Cogley, T. and Nason, J.M. [1995], Output dynamics in real-business-cycle models, The American Economic Review, 85(3), pp. 492–511.Google Scholar
Cooley, T.F., Hansen, G.D. and Prescott, E.C. [1995], Equilibrium business cycles with idle resources and variable capacity utilization, Economic Theory, 6(1), pp. 35–50.Google Scholar
Cueva, S. [1995], Demandes de facteurs et degrés d'utilisation du capital et du travail, Thèse de Doctorat en Sciences Économiques, Université Paris-I Panthéon-Sorbonne.Google Scholar
Cueva, S. and Heyer, E. [1995], Fonction de production et degrés d'utilisation du capital et du travail: une analyse économétrique, Présenté au séminaire Jeunes Economètres à l'Université Lille III, Grefi, mai.Google Scholar
Dupaigne, M. [1997], La réduction du temps de travail modifie-t-elle la durée d'utilisation des équipements?, in Cahuc, P. et Granier, P., éds, La réduction du temps de travail, Paris, Economica, pp. 287–310.Google Scholar
Fagnart, J-F, Licandro, O. and Portier, F. [1996], Firms heterogeneity, capacity utilization and the business cycle, CEPREMAP, Working Paper n° 9607.Google Scholar
Finn, M.G. [1995], Variance properties of Solow's productivity residual and their cyclical implications, Journal of Economic Dynamics and Control, 19(5-7), pp. 1249–1281.Google Scholar
Greenwood, J., Hercowitz, Z. and Huffman, G. [1988], Investment, capacity utilization and the real business cycle, American Economic Review, 78(3), pp. 402–417.Google Scholar
Hairault, J-O. and Portier, F. [1993], Money, new-keynesian macroeconomics and the business cycle, European Economic Review, 37(8), pp. 1533–1568.Google Scholar
Hall, R. [1989], Invariance property of Solow's residual, NBER, Working paper n° 3034.Google Scholar
Hansen, C.D. [1985], Indivisible labor and the business cycles, Journal of Monetary Economics, 16, pp. 309–327.Google Scholar
Johnson, P.A. [1994], Capital utilization and investment when capital depreciates in use: some implications and tests, Journal of Macroeconomics, 16(2), pp. 243–259.Google Scholar
King, R., Plosser, C. and Rebelo, S. [1988], Production, growth and business cycles, Journal of Monetary Economics, 21(2/3), pp. 196–232.Google Scholar
Kydland, F.E. and Prescott, E.C. [1988], The workweek of capital and its cyclical implications, Journal of Monetary Economics, 21(2/3), pp. 343–360.Google Scholar
Kydland, F.E. and Prescott, E.C. [1991], Hours and employment variation in business cycle theory, Economic Theory, 1(1), pp. 63–81.Google Scholar
Licandro, O. and Puch, L.A. [1995], Capital utilization, maintenance costs and the business cycle, FEDEA, Documento de trabajo n° 95-16.Google Scholar
Rogerson, R. [1988], Indivisible labor, lotteries and equilibrium, Journal of Monetary Economics, 21(1), pp. 3–17.Google Scholar
Rotemberg, J.J. and Woodford, M. [1994], Is the business cycle a necessary consequence of stochastic growth?, NBER, Working Paper n° 4650.Google Scholar
Shapiro, M.D. [1986], Capital utilization and capital accumulation: theory and evidence, Journal of Applied Econometrics, 1(3), pp. 211–234.Google Scholar
Shapiro, M.D. [1993], Cyclical productivity and the workweek of capital, American Economic Review, 83(2), pp. 229–233.Google Scholar
Taubman, P. and Wilkinson, M. [1970], User cost, capital utilization and investment theory, International Economic Review, 11(2), pp. 209–215.Google Scholar
Wen, Y. [1997], Capacity utilization under increasing returns to scale, Hong Kong University of Science and Technology, mimeo.Google Scholar
Winston, G.C. [1974], The theory of capital utilization and idleness, Journal of Economic Litterature, 12(december), pp. 1301–1320.Google Scholar