Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96661
Authors: 
Gourio, François
Rudanko, Leena
Year of Publication: 
2014
Series/Report no.: 
Working Paper, Federal Reserve Bank of Chicago 2014-02
Abstract: 
Intangible capital is an important factor of production in modern economies that is generally neglected in business cycle analyses. We demonstrate that intangible capital can have a substantial impact on business cycle dynamics, especially if the intangible is complementary with production capacity. We focus on customer capital: the capital embodied in the relationships a firm has with its customers. Introducing customer capital into a standard real business cycle model generates a volatile and countercyclical labor wedge, due to a mismeasured marginal product of labor. We also provide new evidence on cyclical variation in selling effort to discipline the exercise.
Subjects: 
Business cycle
capital
labor wedge
JEL: 
E13
E32
Document Type: 
Working Paper

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