The Informational Role of the Business Cycle

26 Pages Posted: 20 Nov 2003

See all articles by Harris Dellas

Harris Dellas

University of Bern - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: October 2003

Abstract

Economic decisions such as occupational and entrepreneurial choices may violate true comparative advantage when economic agents are uncertain about which activity best matches their talents. If relative performance varies over the business cycle (for instance, if downturns affect disproportionately those who are pursuing the wrong activity), then economic fluctuations may affect the probability and persistence of resource mismatches. The present work offers a novel, informational perspective to the business cycle and provides a link between aggregate fluctuations and the long-term allocation of resources.

Keywords: Business cycles, incomplete information, matching, comparative advantage, stabilization

Keywords: Business cycles, incomplete information, matching, comparative advantage, stabilization

JEL Classification: D83, E32, E60

Suggested Citation

Dellas, Harris, The Informational Role of the Business Cycle (October 2003). Available at SSRN: https://ssrn.com/abstract=471181

Harris Dellas (Contact Author)

University of Bern - Department of Economics ( email )

Gesellschaftstrasse 49
Bern, CH-3012
Switzerland
+41 31 631 3989 (Phone)
+41 31 631 3992 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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