Advanced Search
MyIDEAS: Login

Learning about Others Actions and the Investment Accelerator

Contents:

Author Info

  • Daron Acemoglu

Abstract

A General Equilibrium model of investment is constructed in which the pay-offs of firms depend on each other's actions. It is shown that when these actions are unobservable but aggregate output is in the information set of the agents; it acts as a signal. The implication is that output will lead investment over the business cycle. This gives a theory of the Rational Expectations Investment Accelerator. Learning also changes the cyclical behaviour of the endogenous variables and leads to a loss of output and efficiency. The inefficiency depends on the amount of noise in the system thus reducing fluctuations can have first-order welfare effects. It is also shown that the introduction of a stock market will not alter the qualitative conclusion of the paper. The intuition of this paper for the investment accelerator also suggests that an "employer accelerator" might exist. An economic investigation of the US and UK data gives support to these accelerators. Also, the model predicts, investment is less responsive to output when its conditional variance is higher.

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0072.

as in new window
Length:
Date of creation: Jun 1992
Date of revision:
Handle: RePEc:cep:cepdps:dp0072

Contact details of provider:
Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

Related research

Keywords:

Other versions of this item:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Guido Fioretti, 2002. "Recognizing Investment Opportunities at the Onset of Recoveries," Macroeconomics 0207008, EconWPA.
  2. George-Marios Angeletos & Alessandro Pavan, 2004. "Transparency of Information and Coordination in Economies with Investment Complementarities," Discussion Papers 1494, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Mustafa Caglayan & Neslihan Ozkan & Christopher F Baum, 2002. "Sectoral Fluctuations in U.K. Firms' Investment Expenditures," Research Papers 2002_01, University of Liverpool Management School.
  4. Blackley, Paul R., 2000. "Sources of sectoral fluctuations in business fixed investment," Journal of Economics and Business, Elsevier, vol. 52(6), pages 473-484.
  5. Rodriguez Mora, Jose V. & Schulstad, Paul, 2007. "The effect of GNP announcements on fluctuations of GNP growth," European Economic Review, Elsevier, vol. 51(8), pages 1922-1940, November.
  6. José V. Rodríguez Mora, 1995. "Shared knowledge," Economics Working Papers 144, Department of Economics and Business, Universitat Pompeu Fabra.
  7. George-Marios Angeletos & Alessandro Pavan, 2005. "Efficiency and Welfare with Complementarities and Asymmetric Information," NBER Working Papers 11826, National Bureau of Economic Research, Inc.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cep:cepdps:dp0072. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.