NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

What Drives Aggregate Investment?

Rüdiger Bachmann, Peter Zorn

NBER Working Paper No. 18990
Issued in April 2013
NBER Program(s):   EFG   ME

Using firm-level survey data for the West German manufacturing sector, this paper revisits the technology-driven business cycle hypothesis for the case of aggregate investment. We construct a survey-based measure of technology shocks to gauge their contribution to short-run investment fluctuations. We estimate an upper bound for the contribution of technology shocks to the variance of the aggregate investment growth rate of 19 percent. The larger part of fluctuations in aggregate investment can be attributed to finance and demand shocks, which we also extract from the survey data.

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Document Object Identifier (DOI): 10.3386/w18990

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