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The Microeconomics of Macroeconomic Asymmetries: Sectoral Driving Forces and Firm Level Characteristics

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Author Info
Oleg Korenok () (Rutgers University)
Bruce Mizrach () (Rutgers University)
Stan Radchenko () (University of North Carolina at Charlotte)

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Abstract

There is now considerable evidence that business cycle variation in output and employment in the U.S. differs in expansions and contractions. We present nonparametric evidence that asymmetries are strongest in durable goods manufacturing. In a Markov switching framework, we find two leading indicators, consumer expectations and the term spread, act as important driving forces behind asymmetry. Cross sectional analysis, using firm level data, shows that plant and equipment expenditures, raw materials inventory holdings, and bankruptcy score increase the likelihood ratio index for asymmetry by more than 65%.

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Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 200405.

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Length: 20 pages
Date of creation: 28 Feb 2004
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Handle: RePEc:rut:rutres:200405

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Related research
Keywords: asymmetry; Markov switching; leading indicators; industry; NA;

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Find related papers by JEL classification:
E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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