adjustmentvery well. Although inputs adjust slowly, production responds quickly to the demand shock andthis adjustment is explained … by a combination of increasing returns and increased utilization ofthe production factors. To avoid stock-outs, firms …

estimate a reduced-form model to describe how firms adjust their production, employment, capital stock, and inventories in …

determined endogenously. We find that there is a short run transitory productivity dynamic introduced when there is imperfect …