The time structure of production in the US, 2002-2009

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Abstract

The US time structure of production during the 2002 through 2009 business cycle is characterized empirically using industry-level input-output data. An industry's total industry output requirement (TIOR) is proposed as a metric for "roundaboutness". I find that the time structure of production lengthened following the Federal Reserve's 2002 expansionary deviation from the Taylor rule and then contracted during the Great Recession. Value added growth in the most-roundabout of US industries accelerated relative to that of the least-roundabout industries. Heading into the Great Recession, value-added growth in the most-roundabout industries contracted early and turned negative in 2007 while value-added growth in the least-roundabout industries remained positive until 2009. The stylized facts of the time structure of production are consistent with Austrian Business Cycle Theory.

Original languageEnglish
Pages (from-to)77-92
Number of pages16
JournalReview of Austrian Economics
Volume25
Issue number2
DOIs
StatePublished - Jun 2012

Keywords

  • Austrian business cycle theory
  • Capital structure
  • Input-output analysis
  • Roundabout methods of production
  • Time structure of production

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