Productivity rises in booms and falls in recessions. There are four main explanations for this procyclical productivity … procyclical productivity as an essential feature of business cycles because each explanation has important implications for … utilization and resource reallocations are particularly important in explaining procyclical productivity. We also argue that the …

, thus increasing productivity, but worsens incumbents' scale economies, thus decreasing productivity. I outline a theory …I analyze two opposing effects of firm dynamics on productivity over the business cycle. Consider net exit, on the one … hand it reallocates resources to incumbents whose productivity improves through scale economies, on the other hand it …

Standard models of imperfectly competitive labor market predict that real wages are unaffected by productivity. This is … responsiveness, we find in accordance with empirical evidence that permanent productivity changes affect real wages and not … employment. Hence, the model solves the productivity puzzle and is capable of matching both business cycle and long-run facts …

productivity shocks. The government should follow a counter-cyclical fiscal policy if it wants to stabilize income (against … productivity shocks), but this policy is not in the interest of the households which prefer pro-cyclical fiscal spending. We also …

Productivity rises in booms and falls in recessions. There are four main explanations for this procyclical productivity … procyclical productivity as an essential feature of business cycles because each explanation has important implications for … utilization and resource reallocations are particularly important in explaining procyclical productivity. We also argue that the …