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I - Q Cycles

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Author Info
Patrick Francois () (University of British Columbia)
Huw Lloyd-Ellis () (Queen's University)

Additional information is available for the following registered author(s):

Abstract

We develop a model of "intrinsic" business cycles, driven by the decentralized behaviour of entrepreneurs and firms making continuous, divisible improvements in their productivity. We show how equilibrium cycles, associated with strategic delays in implementation and endogenous innovation, arise even in the presence of reversible investment. We derive the implications for the cyclical evolution of both tangible (physical) and intangible (knowledge) capital. In particular, our framework is consistent with key aspects of the somewhat puzzling relationship between fixed capital formation and the stockmarket at business cycle frequencies.

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File URL: http://www.econ.queensu.ca/working_papers/papers/qed_wp_1040.pdf
File Format: application/pdf
File Function: First version 2005
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Publisher Info
Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1040.

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Length: 41 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:qed:wpaper:1040

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Postal: Kingston, Ontario, K7L 3N6
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Web page: http://www.econ.queensu.ca/
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Related research
Keywords: Tobin\'s Q fixed capital formation intangible investment cycles and growth

Other versions of this item:

Find related papers by JEL classification:
E0 - Macroeconomics and Monetary Economics - - General
E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
O3 - Economic Development, Technological Change, and Growth - - Technological Change
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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  22. Abel, Andrew B & Blanchard, Olivier J, 1986. "The Present Value of Profits and Cyclical Movements in Investment," Econometrica, Econometric Society, vol. 54(2), pages 249-73, March. [Downloadable!] (restricted)
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    Other versions:
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