A real explanation for heterogeneous investment dynamics

Jonas Fisher

No WP-01-14, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: Household investment, that is investment in consumer durables and housing, leads non-residential fixed investment over the U.S. business cycle. This observation represents a potent challenge to real business cycle (RBC) theory. First of all the theory has been unable to account for it. In addition, research suggests the observation is driven by monetary shocks, supporting the view that these shocks play a leading role in the U.S. business cycle. This paper shows that RBC theory is consistent with the investment dynamics after all. It does so by generalizing the standard home production environment to take into account the fact that household capital is useful in market production.

Keywords: Monetary theory; Business cycles (search for similar items in EconPapers)
Date: 2001
New Economics Papers: this item is included in nep-dge and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.chicagofed.org/digital_assets/publicati ... s/2001/Wp2001-14.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhwp:wp-01-14

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Lauren Wiese ().