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