Asymmetric Cycles

27 Pages Posted: 4 Jul 2004

See all articles by Boyan Jovanovic

Boyan Jovanovic

New York University - Department of Economics

Date Written: June 2004

Abstract

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.

Suggested Citation

Jovanovic, Boyan, Asymmetric Cycles (June 2004). NBER Working Paper No. w10573, Available at SSRN: https://ssrn.com/abstract=559223

Boyan Jovanovic (Contact Author)

New York University - Department of Economics ( email )

19 w 4 st.
New York, NY 10012
United States

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