Investment price rigidity and business cycles

Alban Moura

No 105, BCL working papers from Central Bank of Luxembourg

Abstract: This paper incorporates sticky investment prices in a two-sector monetary model of business cycles. Fit to quarterly U.S. time series, the model suggests that price rigidity in the investment sector is the single most empirically relevant friction to match the data. Sticky investment prices are also important to understand the dynamic effects of technology shocks and their pass-through to the relative price of investment goods.

Keywords: investment price rigidity; relative price of investment; multisector DSGE model. (search for similar items in EconPapers)
JEL-codes: C32 E32 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2017-03
New Economics Papers: this item is included in nep-dge and nep-mac
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https://www.bcl.lu/en/publications/Working-papers/105/BCLWP105.pdf (application/pdf)

Related works:
Journal Article: Investment Shocks, Sticky Prices, and the Endogenous Relative Price of Investment (2018)
Working Paper: Investment Price Rigidities and Business Cycles (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:bcl:bclwop:bclwp105

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