How important is discrete adjustment in aggregate fluctuations?

Individual actions such as the purchase of a machine or the changing or a price are often discrete and infrequent. Macroeconomic models, however, often ignore this intermittent behavior. In this paper, we present conditions under which a representative agent model, which ignores discrete adjustment on the individual level, is observationally equivalent to a model that takes discrete adjustment into account. We also provide a mapping between the preference and technology parameters of the two models and present conditions under which this mapping is an identity.