To analyze business fixed investment in Japan, which has been unusually volatile in recent years, we develop and apply a loglinear flexible accelerator model. We find that movements in business fixed investment are consistent with movements in output and the tax- adjusted cost of capital, both on average during our entire 1961-94 sample and during the recent 1986-94 business cycle.
*Published: This paper was subsequently published as Business Fixed Investment and the Recent Business Cycle in Japan, Nobuhiro Kiyotaki, Kenneth D. West, in NBER book NBER Macroeconomics Annual 1996, Volume 11 (1996)
NBER Macroeconomics Annual 1996, Ben S. Bernanke and Julio Rotemberg, eds.,p. 277, (Cambridge: MIT Press, 1996).
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