Economists have recently argued recessions play a useful role in fostering growth. Yet a major source of growth, R&D, is procyclical. This paper argues one reason for procyclical R&D is a dynamic externality inherent to R&D that makes entrepreneurs short-sighted and concentrate their innovation in booms even when it is optimal to concentrate it in recessions. Additional forces may imply that pr...

Cyclicality and the Labor Market for Economists Using a unique sample of new Ph.D. economists in 1987 and 1997, we examine how job seekers and their employers alter their search strategies in strong versus weak markets. The 1987 academic market was strong while the 1997 market was much weaker. A multimarket theory of optimal search suggests that job seekers will respond to a weakening market by...

This paper investigates the existence of markups and their cyclical behaviour at industry sector level. Markups are given as a price-cost relation that is estimated from a dynamic, structural model of the firm. The firms face costly adjustment of labour and potential financial constraints. The model is tested on a panel of firmand plant-level data from Norwegian manufacturing industries. The re...