Essays on the Great Depression

By Ben S. Bernanke | Go to book overview

Eight
Procyclical Labor Productivity and Competing
Theories of the Business Cycle: Some Evidence
from Interwar U.S. Manufacturing Industries

WITH MARTIN PARKINSON


I. Introduction

Since its discovery by Hultgren (1960), the procyclical behavior of average labor productivity, also known as short-run increasing returns to labor (SRIRL), has achieved the status of a basic stylized fact of macroeconomics. The ubiquitous nature of procyclical productivity has been confirmed by studies at levels of aggregation ranging from the firm to the national economy, and for a variety of countries and sample periods.

Much of the original research on procyclical productivity was undertaken during the 1960s and early 1970s, contributions being made by Brechling (1965), Kuh (1965), Ball and St. Cyr (1966), Solow (1968), Fair (1969), and Sims (1974), among others. More recently, attention has been refocused on SRIRL in the context of research on real business cycles (Prescott 1986b) and by the work of Fay and Medoff (1985), Hall (1987, 1988a, 1988b), Rotemberg and Summers (1988), and Chirinko (1989). The reason for the renewed interest in SRIRL is that, as has become increasingly clear, the choice of explanation of SRIRL effectively entails a choice among some leading contemporary models of the business cycle.

Three major explanations for SRIRL have been advanced: technology shocks, true increasing returns, and labor hoarding. Each explanation is closely associated with a competing model of the cycle.

The technology shocks explanation is favored by the competitive real business cycle approach, as exposited by Prescott (1986b). In the real business cycle model, changes in technology are the driving force behind cyclical fluctuations, and intertemporal substitution in labor supply is a key propaga-

Reprinted with permission from Journal of Political Economy, vol. 99, no. 31 (1991). Copy-
right © 1991 by The University of Chicago. All rights reserved.

We thank the referee for useful comments. Financial support from, respectively, the National
Science Foundation and the Australian Treasury is gratefully acknowledged. Views expressed
are our own and should not be attributed to the Treasury.

-255-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Essays on the Great Depression
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
/ 310

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.