Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model

Ruediger Bachmann, Ricardo Caballero () and Eduardo Engel

American Economic Journal: Macroeconomics, 2013, vol. 5, issue 4, 29-67

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.

JEL-codes: E13 E22 E32 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/mac.5.4.29
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Citations: View citations in EconPapers (87)

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Related works:
Working Paper: Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model (2010)
Working Paper: Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model (2006)
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