Endogenous Technology Adoption and R&D as Sources of Business Cycle Persistence
AbstractWe examine the hypothesis that the slowdown in productivity following the Great Recession was in significant part an endogenous response to the contraction in demand that induced the downturn. We motivate, develop, and estimate a model with an endogenous TFP mechanism that allows for costly development and adoption of technologies. Our main finding is that a significant fraction of the post-Great Recession fall in productivity was an endogenous phenomenon, suggesting that demand factors played an important role in the postcrisis slowdown of capacity growth. More generally, we provide insight into why recoveries from financial crises may be so slow.
CitationAnzoategui, Diego, Diego Comin, Mark Gertler, and Joseba Martinez. 2019. "Endogenous Technology Adoption and R&D as Sources of Business Cycle Persistence." American Economic Journal: Macroeconomics, 11 (3): 67-110. DOI: 10.1257/mac.20170269
- E23 Macroeconomics: Production
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E32 Business Fluctuations; Cycles
- E44 Financial Markets and the Macroeconomy
- G01 Financial Crises