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Investment price rigidity and business cycles

Listed author(s):
  • Alban Moura

    ()

This paper incorporates sticky investment prices in a two-sector monetary model of business cycles. Fit to quarterly U.S. time series, the model suggests that price rigidity in the investment sector is the single most empirically relevant friction to match the data. Sticky investment prices are also important to understand the dynamic effects of technology shocks and their pass-through to the relative price of investment goods.

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File URL: http://www.bcl.lu/en/publications/Working-papers/105/BCLWP105.pdf
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Paper provided by Central Bank of Luxembourg in its series BCL working papers with number 105.

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Length: 39 pages
Date of creation: Mar 2017
Handle: RePEc:bcl:bclwop:bclwp105
Contact details of provider: Web page: http://www.bcl.lu/

References listed on IDEAS
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  1. Joel Wagner, 2015. "The Endogenous Relative Price of Investment," Staff Working Papers 15-30, Bank of Canada.
  2. Beaudry, Paul & Moura, Alban & Portier, Franck, 2015. "Reexamining the cyclical behavior of the relative price of investment," Economics Letters, Elsevier, vol. 135(C), pages 108-111.
  3. Kim, Jinill, 2003. "Functional equivalence between intertemporal and multisectoral investment adjustment costs," Journal of Economic Dynamics and Control, Elsevier, vol. 27(4), pages 533-549, February.
  4. Alain Gabler, 2014. "Relative Price Fluctuations in a Two-Sector Model with Imperfect Competition," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(3), pages 474-483, July.
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