American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model
American Economic Journal: Macroeconomics
vol. 5,
no. 4, October 2013
(pp. 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.Citation
Bachmann, Rüdiger, Ricardo J. Caballero, and Eduardo M. R. A. Engel. 2013. "Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model." American Economic Journal: Macroeconomics 5 (4): 29–67. DOI: 10.1257/mac.5.4.29Additional Materials
JEL Classification
- E13 General Aggregative Models: Neoclassical
- E22 Capital; Investment; Capacity
- E32 Business Fluctuations; Cycles