We seek to explain the economic volatility of the last 6 years, in particular the rapid expansion and contraction of the knowledge sectors. Our hypothesis is that these sectors amplify the business cycle due to their increasing returns to scale, growing faster than others in an upswing and...

Sectors with increasing returns to scale have been shown to amplify business cycles exhibiting more volatility than others. Our hypothesis is that this volatility could be a cause of the rdquo;'jobless recoveryquot; suggesting policies for employment generation. To test this hypothesis we...