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

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  • Bernanke, Ben S
  • Parkinson, Martin L

Abstract

The authors study the phenomenon of short-run increasing returns to labor (SRIRL) in a sample of ten interwar U.S. manufacturing industries. Their authors main findings are that SRIRL was common in the interwar period and that the pattern of SRIRL across industries was similar to that observed in the postwar period. The authors argue that, since presumably the Depression was not caused by technical regress, these findings are inconsistent with the claim of real business cycle theorists that SRIRL are, in general, due to procyclical technological shocks. They propose tests for discriminating between two other leading explanations of SRIRL, but find that their conclusions differ by industry. Copyright 1991 by University of Chicago Press.

Suggested Citation

  • Bernanke, Ben S & Parkinson, Martin L, 1991. "Procyclical Labor Productivity and Competing Theories of the Business Cycle: Some Evidence from Interwar U.S. Manufacturing Industries," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 439-459, June.
    • Handle: RePEc:ucp:jpolec:v:99:y:1991:i:3:p:439-59
    DOI: 10.1086/261761
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