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Extensive and Intensive Investment over the Business Cycle / Boyan Jovanovic, Peter L. Rousseau.
- Format:
- Book
- Author/Creator:
- Jovanovic, Boyan.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w14960.
- NBER working paper series no. w14960
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2009.
- Summary:
- Investment of U.S. firms responds asymmetrically to Tobin's Q: investment of established firms -- 'intensive' investment -- reacts negatively to Q whereas investment of new firms -- 'extensive' investment -- responds positively and elastically to Q. This asymmetry, we argue, reflects a difference between established and new firms in the cost of adopting new technologies. A fall in the compatibility of new capital with old capital raises measured Q and reduces the incentive of established firms to invest. New firms do not face such compatibility costs and step up their investment in response to the rise in Q. The model fits the data well using aggregates since 1900.
- Notes:
- Print version record
- May 2009.
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