Chang, Yongsung; Hornstein, Andreas - Society for Economic Dynamics - SED - 2004
We present a simple sticky-price model with inventories and show that the employment response to a productivity shock … (decreases) when the depreciation rate on goods in storage is sufficiently low (high) following a productivity shock. We then … estimate the employment response to productivity shocks from the disaggregate U.S. manufacturing data from 1958 to 1996 …