TY  - JOUR
AU  - Gilchrist,Simon
AU  - Williams,John C.
TI  - Investment, Capacity, and Uncertainty: A Putty-Clay Approach
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10446
PY  - 2004
Y2  - April 2004
UR  - http://www.nber.org/papers/w10446
L1  - http://www.nber.org/papers/w10446.pdf
N1  - Author contact info:
Simon Gilchrist
Department of Economics
Boston University
270 Bay State Road
Boston, MA  02215
Tel: 617/353-6824
Fax: NA
E-Mail: sgilchri@bu.edu

John Williams
Federal Reserve Bank of San Francisco
Economic Research Department, MS 1130
101 Market St.
San Francisco, CA 94105
Tel: (415) 974-2240
Fax: (415) 974-2168
E-Mail: john.c.williams@sf.frb.org
AB  - We embed the microeconomic decisions associated with investment under uncertainty, capacity utilization, and machine replacement in a general equilibrium model based on putty-clay technology. In the presence of irreversible factor proportions, a mean-preserving spread in the productivity of investment raises aggregate investment, productivity, and output. Increases in uncertainty have important dynamic implications, causing sustained increases in investment and hours and a medium-term expansion in the growth rate of labor productivity.
ER  -