January 11, 2010, 17:00–18:30
Toulouse
Room MF 323
Political Economy Seminar
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: General
- E22: Capital • Investment • Capacity
- E30: General
- E32: Business Fluctuations • Cycles
- E62: Fiscal Policy