TECHNOLOGICAL FLEXIBILITY AND THE MACROECONOMIC ENVIRONMENT

This paper studies the link between aggregate fluctuations and technological choice. It is shown that a more volatile environment discourages the adoption of product-flexible technologies and induces the adoption of volume-flexible technologies. The consequences of this argument for economic policy are then discussed, and some empirical evidence supporting the hypothesis is presented. J. Japan. Int. Econ., March 1993, 7(l), pp. 78-106. DELTA, CERAS, Paris 75014, France; and CEPR, London. UK. © 1993 Academic Press Limited.