Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model
Author(s)Bachmann, Rüdiger; Caballero, Ricardo J.; Engel, Eduardo M. R. A.
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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.
DepartmentMassachusetts Institute of Technology. Department of Economics
American Economic Journal: Macroeconomics
American Economic Association
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
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