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External Economies in Procyclical Productivity: How Important Are They?

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  • Lindstrom, Tomas

Abstract

Using the method of Caballero and Lyons (1990, 1992), I examined detailed Swedish manufacturing firm-level data on output and factor inputs from 1979 through 1994. Panel regressions show that an increase in aggregate output and inputs appears to raise individual firms' production beyond private marginal returns, a result consistent with positive external effects from aggregate activity. However, while considering potential specification difficulties, this analysis shows that a model in which high-frequency exogenous shifts in technology drive the business cycle statistically outperforms the Caballero-Lyons model. This finding suggests that economy-wide fluctuations in technology are more important for movements in firms' productivity than are external economies. Copyright 2000 by Kluwer Academic Publishers

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  • Lindstrom, Tomas, 2000. "External Economies in Procyclical Productivity: How Important Are They?," Journal of Economic Growth, Springer, vol. 5(2), pages 163-184, June.
    • Handle: RePEc:kap:jecgro:v:5:y:2000:i:2:p:163-84
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    Cited by:

    1. Andreas Pfingsten & Reiner Wolff, 2009. "Factor Supply Changes in Small Open Economies: Rybczynski Derivatives under Increasing Marginal Costs," Finnish Economic Papers, Finnish Economic Association, vol. 22(1), pages 9-20, Spring.
    2. Wendner, Ronald, 2008. "Finite Horizon, Externalities, and Growth," MPRA Paper 8248, University Library of Munich, Germany.
    3. Takao Asano & Akihisa Shibata & Masanori Yokoo, 2024. "Technology choice, externalities in production, and a chaotic middle-income trap," Journal of Economics, Springer, vol. 141(1), pages 29-56, January.
    4. Lucas Navarro & Raimundo Soto, 2001. "Procyclical productivity : evidence from an emerging economy," Working Papers Central Bank of Chile 109, Central Bank of Chile.
    5. Wendner, Ronald, 2008. "Externalities in a Model of Perpetual Youth with Age-Dependent Productivity," MPRA Paper 11335, University Library of Munich, Germany.

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