NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model

Ruediger Bachmann, Ricardo J. Caballero, Eduardo M.R.A. Engel

NBER Working Paper No. 12336
Issued in June 2006
NBER Program(s):   EFG

The sensitivity of U.S. aggregate investment to shocks is procyclical: the initial response increases by approximately 50% from the trough to the peak of the business cycle. This feature of the data follows naturally from a DSGE model with lumpy microeconomic capital adjustment. Beyond explaining this specific time variation, our model and evidence provide a counterexample to the claim that microeconomic investment lumpiness is inconsequential for macroeconomic analysis.

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This paper was revised on June 18, 2008

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Document Object Identifier (DOI): 10.3386/w12336

Published: R?diger Bachmann & Ricardo J. Caballero & Eduardo M. R. A. Engel, 2013. "Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(4), pages 29-67, October.

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