Investment Spikes: New Facts and a General Equilibrium Exploration / Francois Gourio, Anil K. Kashyap.

Format:

Book

Author/Creator:

Gourio, Francois.

Contributor:

National Bureau of Economic Research.

Kashyap, Anil K.

Series:

Working Paper Series (National Bureau of Economic Research) no. w13157.

NBER working paper series no. w13157

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Investment Spikes

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2007.

Summary:

Using plant-level data from Chile and the U.S. we show that investment spikes are highly pro-cyclical, so much so that changes in the number of establishments undergoing investment spikes (the "extensive margin") account for the bulk of variation in aggregate investment. The number of establishments undergoing investment spikes also has independent predictive power for aggregate investment, even controlling for past investment and sales. We re-calibrate the Thomas (2002) model (that includes fixed costs of investing) so that it assigns a prominent role to extensive adjustment. The recalibrated model has different properties than the standard RBC model for some shocks.

Notes:

Print version record

June 2007.