Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model
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Caballero_Aggregate implications.pdf
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Author(s)
Bachmann, Rüdiger
Caballero, Ricardo J.
Engel, Eduardo M. R. A.
Date Issued
October 2013
Journal
American Economic Journal: Macroeconomics
Publisher
American Economic Association
Citation
Bachmann, Rüdiger, Ricardo J. Caballero, and Eduardo M. R. A. Engel. “ Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model.” American Economic Journal: Macroeconomics 5, no. 4 (October 2013): 29–67. © 2013 American Economic Association
Version
Final published version
Abstract
The sensitivity of US aggregate investment to shocks is procyclical. The response upon impact increases by approximately 50 percent from the trough to the peak of the business cycle. This feature of the data follows naturally from a DSGE model with lumpy microeconomic capital adjustment. Beyond explaining this specific time variation, our model and evidence provide a counterexample to the claim that microeconomic investment lumpiness is inconsequential for macroeconomic analysis.
MIT Department
Massachusetts Institute of Technology. Department of Economics
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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/mac.5.4.29
