Endogenous Fluctuations of Investment and Output in a Model of Discrete Capital Adjustments

Makoto Nirei and 誠 楡井

No 09-01, IIR Working Paper from Institute of Innovation Research, Hitotsubashi University

Abstract: This paper presents a model of endogenous fluctuations of investment and output at the business cycles frequencies. Aggregate investments fluctuate endogenously due to the strategic complementarity of micro-level lumpy investments. The investment fluctuations are transmitted to the output via variable utilization of capital. Simulations show that there is a range of parameter values under with the model economy exhibits a large magnitude of fluctuations and comovements in investment and output.

Keywords: business cycles; lumpy investment; variable capacity utilization; nonlinear dynamics (search for similar items in EconPapers)
JEL-codes: E22 E32 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2009-04
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:hit:iirwps:09-01

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