Since the use of inputs is subject to cyclical factors, economic activities tend to fluctuate over the business cycle. As a consequence, TFP estimates exhibit procyclical behaviour and need to be adjusted for capacity utilisation (Hulten, 2000).
Since the use of inputs is subject to cyclical factors, economic activities tend tofluctuate over the business cycle. As a consequence, TFP estimates exhibit procyclicalbehaviour and need to be adjusted for capacity utilisation (Hulten, 2000).