Implementation Cycles, Investment, And Growth
AbstractWe develop a model of "intrinsic" cycles, driven by the decentralized behavior of entrepreneurs and firms making continuous, divisible improvements in their productivity. We show that when the introduction of productivity improvements is endogenous, implementation cycles arise even in the presence of reversible investment and consumption smoothing. The implied cyclical equilibrium is unique within its class and shares several features in common with actual business cycles. In particular, its predictions are qualitatively consistent with the joint behavior of the investment rate and Tobin's Q during U.S. recessions. Copyright � 2008 the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Bibliographic InfoArticle provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 49 (2008)
Issue (Month): 3 (08)
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- Olaf Posch & Klaus Wälde, 2011. "On the link between volatility and growth," Journal of Economic Growth, Springer, vol. 16(4), pages 285-308, December.
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- Tom Holden, 2012. "Medium-frequency cycles and the remarkable near trend-stationarity of output," School of Economics Discussion Papers 1412, School of Economics, University of Surrey.
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