NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Aggregate Implications of Machine Replacement: Theory and Evidence

Russell Cooper, John Haltiwanger

NBER Working Paper No. 3552 (Also Reprint No. r1793)
Issued in December 1990
NBER Program(s):   EFG

This paper studies an economy in which producers must incur resource costs to replace depreciated machines. The process of costly replacement and depreciation creates endogenous fluctuations in productivity, employment and output of a single producer. We also explore the spillover effects of machine replacement by multiple, independent producers. The implications of our model are generally consistent with observed monthly output and productivity fluctuations in automobile plants and with monthly variations in employment and production in the manufacturing sector.

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Document Object Identifier (DOI): 10.3386/w3552

Published: American Economic Review, Vol. 83, No. 3, pp. 360-382 (June 1993). citation courtesy of

 
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