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Lumpiness, capital adjustment costs and investment dynamics

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  • Fiori, Giuseppe

Abstract

Aggregate investment in the US economy displays a hump-shaped pattern in response to shocks, and the autocorrelation of aggregate investment growth is positive for the first few quarters, turning negative for the later quarters. This paper shows that this feature of the data is the natural outcome of a two-sector consumption/investment model designed and calibrated to reproduce plant-level evidence on capital accumulation.

Suggested Citation

  • Fiori, Giuseppe, 2012. "Lumpiness, capital adjustment costs and investment dynamics," Journal of Monetary Economics, Elsevier, vol. 59(4), pages 381-392.
  • Handle: RePEc:eee:moneco:v:59:y:2012:i:4:p:381-392
    DOI: 10.1016/j.jmoneco.2012.03.005
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    References listed on IDEAS

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    Cited by:

    1. Fabio Verona, 2011. "Lumpy investment in sticky information general equilibrium," CEF.UP Working Papers 1102, Universidade do Porto, Faculdade de Economia do Porto.
    2. Lim, Jamus Jerome, 2014. "Institutional and structural determinants of investment worldwide," Journal of Macroeconomics, Elsevier, vol. 41(C), pages 160-177.
    3. Marco Grazzi & Nadia Jacoby & Tania Treibich, 2016. "Dynamics of investment and firm performance: comparative evidence from manufacturing industries," Empirical Economics, Springer, vol. 51(1), pages 125-179, August.
    4. Matteo Cacciatore & Giuseppe Fiori, 2016. "The Macroeconomic Effects of Goods and Labor Marlet Deregulation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 20, pages 1-24, April.
    5. House, Christopher L., 2014. "Fixed costs and long-lived investments," Journal of Monetary Economics, Elsevier, vol. 68(C), pages 86-100.
    6. Christian Bayer & Volker Tjaden, 2016. "Large Open Economies and Fixed Costs of Capital Adjustment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 21, pages 125-146, July.
    7. Reiter, Michael & Sveen, Tommy & Weinke, Lutz, 2013. "Lumpy investment and the monetary transmission mechanism," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 821-834.

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