NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Dorsey D. Farr

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Working Papers

September 2001The Effects of Variable Capital Utilization on the Measurement and Properties of Sectoral Productivity: Some International Evidence
with Marianne Baxter: w8475
This paper explores how accounting for variations in factor utilization rates alters the empirical characteristics of productivity residuals in the United States and Canada. Using data on 19 manufacturing industries, we study the behavior of productivity using three proxies for capital services. We find that adjusting for cyclical movements in capital utilization alters many of the empirical characteristics of productivity, both within and across countries.
July 2001Variable Factor Utilization and International Business Cycles
with Marianne Baxter: w8392
When an economic boom produces high output, employment, and investment in the United States, there is usually a simultaneous boom in other industrialized countries. But, why? Answering this question is a central goal of international macroeconomics. However, multi-country dynamic equilibrium models have struggled with two major problems. The first difficulty is that the productivity shocks required by the model are implausibly large and volatile. Second, these models have difficulty explaining why factor inputs move together so closely across countries: realistic international comovement of business cycles requires implausibly high cross-country correlations of productivity shocks. This paper builds a model in which the utilization rates of capital and labor can be varied in response to sh...

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