Lately, IAR Assistant Research Fellow Dr. Huabin Wu had a co-authored paper
published in a top Chinese field journal—Management World (3rd issue, 2012). The paper is titled "Organizational Capital and
Chinese Business Cycle".
The abstract of the paper is as follows: Organizational Capital (OC) as an
intangible asset originates from the firm's production process. In addition to
its direct effect on the marginal productivity, OC also plays an important role
in the aggregate level. In this paper, we incorporate OC as an input into
Chinese aggregate production function. Based on a dynamic stochastic general
equilibrium model, we conduct the estimation procedure through Bayesian
approach. We find that the model with OC statistically differs with the
traditional RBC model, and the former explains Chinese data much better.
Moreover, our simulation results show that: (1) Ignoring OC might significantly
overstate the role of TFP as a proxy to the technology shock in business cycle
frequency; (2) OC introduces an internal propagation mechanism, which endues our
model more explanatory power; (3) The OC specification shock has significant
impact on the business cycle that contributes around 25% of the total