The workweek of capital and its cyclical implications

Finn E. Kydland, Edward C. Prescott

Research output: Contribution to journalArticle

53 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)343-360
Number of pages18
JournalJournal of Monetary Economics
Volume21
Issue number2-3
DOIs
StatePublished - Jan 1 1988
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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