TY  - JOUR
AU  - Jovanovic,Boyan
AU  - Rousseau,Peter L.
TI  - Extensive and Intensive Investment over the Business Cycle
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14960
PY  - 2009
Y2  - May 2009
UR  - http://www.nber.org/papers/w14960
L1  - http://www.nber.org/papers/w14960.pdf
N1  - Author contact info:
Boyan Jovanovic
New York University
Department of Economics
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8953
Fax: 212/995-4186
E-Mail: Boyan.Jovanovic@nyu.edu

Peter L. Rousseau
Department of Economics
Vanderbilt University
VU Station B #351819
2301 Vanderbilt Place
Nashville, TN 37235-1819
Tel: 615/343-2466
E-Mail: peter.l.rousseau@vanderbilt.edu
AB  - 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.
ER  -