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

Ruediger Bachmann (), Ricardo Caballero () and Eduardo Engel ()

No 12336, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The sensitivity of U.S. aggregate investment to shocks is procyclical: the initial response increases by approximately 50% 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: E10 E22 E30 E32 E62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
Date: 2006-06
Note: EFG
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Published as R?diger Bachmann & Ricardo J. Caballero & Eduardo M. R. A. Engel, 2013. "Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(4), pages 29-67, October.

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Journal Article: Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model (2013) Downloads
Working Paper: Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model (2010) Downloads
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