Explaining the Investment Boom of the 1990s
Real equipment investment in the United States boomed in the 1990s, led by soaring investment in computers. We find that traditional aggregate econometric models completely fail to capture the magnitude of this growth-mainly because these models neglect to address two features that were crucial (and unique) to the 1990s' investment boom. First, the pace at which firms replace depreciated capital increased. Second, investment was more sensitive to the cost of capital. We document that these two features stem from the special behavior of investment in computers and therefore propose a disaggregated approach. This produces an econometric model that successfully explains the 1990s' equipment investment boom.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
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.
Volume (Year): 35 (2003)
Issue (Month): 1 (February)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879|
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.:
- Hansen, Lars Peter & Sargent, Thomas J., 1980.
"Formulating and estimating dynamic linear rational expectations models,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 2(1), pages 7-46, May.
- Lars Peter Hansen & Thomas J. Sargent, 1979. "Formulating and estimating dynamic linear rational expectations models," Working Papers 127, Federal Reserve Bank of Minneapolis.
- Nobuhiro Kiyotaki & Kenneth D. West, 1996.
"Business Fixed Investment and the Recent Business Cycle in Japan,"
in: NBER Macroeconomics Annual 1996, Volume 11, pages 277-344
National Bureau of Economic Research, Inc.
- Nobuhiro Kiyotaki & Kenneth D. West, 1996. "Business Fixed Investment and the Recent Business Cycle in Japan," NBER Working Papers 5546, National Bureau of Economic Research, Inc.
- Stephen D. Oliner, 1993.
"Constant-Quality Price Change , Depreciation, and Retirement of Mainframe Computers,"
in: Price Measurements and Their Uses, pages 19-62
National Bureau of Economic Research, Inc.
- Stephen D. Oliner, 1990. "Constant-quality price change, depreciation, and retirement of mainframe computers," Working Paper Series / Economic Activity Section 110, Board of Governors of the Federal Reserve System (U.S.).
- Feldstein, Martin S & Rothschild, Michael, 1974. "Towards an Economic Theory of Replacement Investment," Econometrica, Econometric Society, vol. 42(3), pages 393-423, May.
- Alan J. Auerbach, 1986.
"Tax Reform and Adjustment Costs: The Impact on Investment and Market Value,"
NBER Working Papers
2103, National Bureau of Economic Research, Inc.
- Auerbach, Alan J, 1989. "Tax Reform and Adjustment Costs: The Impact on Investment and Market Value," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 939-62, November.
- Ben S. Bernanke & Henning Bohn & Peter C. Reiss, 1985.
"Alternative Nonnested Specification Tests of Time Series Investment Models,"
NBER Technical Working Papers
0049, National Bureau of Economic Research, Inc.
- Bernanke, Ben & Bohn, Henning & Reiss, Peter C., 1988. "Alternative non-nested specification tests of time-series investment models," Journal of Econometrics, Elsevier, vol. 37(3), pages 293-326, March.
- Stephen Oliner & Glenn Rudebusch & Daniel Sichel, 1993.
"New and old models of business investment: a comparison of forecasting performance,"
Working Paper Series / Economic Activity Section
141, Board of Governors of the Federal Reserve System (U.S.).
- Oliner, Stephen & Rudebusch, Glenn & Sichel, Daniel, 1995. "New and Old Models of Business Investment: A Comparison of Forecasting Performance," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(3), pages 806-26, August.
- Matthew D. Shapiro, 1986. "The Dynamic Demand for Capital and Labor," The Quarterly Journal of Economics, Oxford University Press, vol. 101(3), pages 513-542.
When requesting a correction, please mention this item's handle: RePEc:mcb:jmoncb:v:35:y:2003:i:1:p:1-22. 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: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.