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Learning by doing, organizational forgetting, and the business cycle
Author(s) -
Bongers Anelí
Publication year - 2023
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/boer.12346
Subject(s) - forgetting , business cycle , shock (circulatory) , productivity , economics , empirical evidence , constant (computer programming) , monetary economics , psychology , cognitive psychology , macroeconomics , computer science , medicine , philosophy , epistemology , programming language
This paper supplements a learning‐by‐doing real business cycle model with endogenous organizational forgetting. Empirical evidence shows that the accumulated experience decay rate is not constant over the business cycle, but that forgetting is a function of economic activity. Learning reinforces the effects of productivity shocks, and organizational forgetting exacerbates their impact and increases their persistence. This is of particular interest when a negative productivity shock hits the economy, as the increasing speed of forgetting aggravates the negative shock and delays recovery.