Lumpy investment and state-dependent pricing in general equilibrium

Michael Reiter, Tommy Sveen () and Lutz Weinke
Additional contact information
Lutz Weinke: Duke University and Institute for Advanced Studies, Vienna

No 2009/05, Working Paper from Norges Bank

Abstract: The lumpy nature of plant-level investment is generally not taken into account in the context of monetary theory (see, e.g., Christiano et al. 2005 and Woodford 2005). We formulate a generalized (S,s) pricing and investment model which is empirically more plausible along that dimension. Surprisingly, our main result shows that the presence of lumpy investment casts doubt on the ability of sticky prices to imply a quantitatively relevant monetary transmission mechanism.

Keywords: Lumpy Investment; Sticky Prices (search for similar items in EconPapers)
JEL-codes: E22 E31 E32 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009-04-07
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mac
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Citations: View citations in EconPapers (4)

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https://www.norges-bank.no/en/news-events/news-pub ... apers/2009/WP-20095/

Related works:
Working Paper: Lumpy Investment and State-Dependent Pricing in General Equilibrium (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bno:worpap:2009_05

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