Investment shocks and the relative price of investment

Investment Shocks and Asset Prices ∗

I explore the implications for asset prices and macroeconomic dynamics of shocks that improve real investment opportunities and thus affect the representative household’s marginal utility. These investment shocks generate differences in risk premia due to their heterogenous impact on firms: they benefit firms producing investment relative to firms producing consumption goods, and increase the v...

Investment Shocks and GDP Responses

Some recent studies of the relationship between investment (or saving) and growth have found an absence of positive causality from the latter to the former. This finding poses a puzzle for growth theory and relies on groups of countries obeying a constant growth equation for its robustness. In this paper I investigate the causality from investment to GDP using postwar time-series data from the ...

Interpreting Investment-Specific Technology Shocks?

Investment-specific technology (IST) shocks are often interpreted as multi-factor productivity (MFP) shocks in a separate investment-producing sector. However, this interpretation is strictly valid only when some stringent conditions are satisfied. Some of these conditions are at odds with the data. Using a two-sector model whose calibration is based on the U.S. Input-Output Tables, we consider...

Price discrimination and investment incentives

a r t i c l e i n f o JEL classifications: F13 L42 L13 D92 Keywords: price discrimination investment parallel trade pharmaceuticals net neutrality We examine a model of a monopolist selling to two segments of consumers with different preferences for quality. We show that if the firm is unable to price discriminate between the segments, then there is less investment in quality. We find that both...

Do Real Estate Shocks Affect Corporate Investment?