Arbeitspapier
Convex supply curves
We provide evidence that industries' supply curves are convex. To guide our empirical analysis, we develop a model, in which capacity constraints at the plant level generate convex supply curves at the industry level. The industry's capacity utilization rate is a sufficient statistic for the supply elasticity. Using data on capacity utilization and three different instruments, we estimate the supply curve and find robust evidence for an economically sizable degree of convexity. The nonlinearity we identify has several macroeconomic implications: Responses to shocks are state-dependent, the Phillips curve is convex, and higher welfare costs of business cycles than Lucas (1987).
- ISBN
-
978-92-899-4377-2
- Language
-
Englisch
- Bibliographic citation
-
Series: ECB Working Paper ; No. 2460
- Classification
-
Wirtschaft
Investment; Capital; Intangible Capital; Capacity
Business Fluctuations; Cycles
Monetary Policy
Fiscal Policy
International Business Cycles
- Subject
-
Slack
Utilization
State-Dependence
Fiscal Policy
Monetary Policy
- Event
-
Geistige Schöpfung
- (who)
-
Boehm, Christoph E.
Pandalai-Nayar, Nitya
- Event
-
Veröffentlichung
- (who)
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European Central Bank (ECB)
- (where)
-
Frankfurt a. M.
- (when)
-
2020
- DOI
-
doi:10.2866/664371
- Handle
- Last update
- 10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Boehm, Christoph E.
- Pandalai-Nayar, Nitya
- European Central Bank (ECB)
Time of origin
- 2020
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