What Explains the Lagged Investment E§ect?
نویسندگان
چکیده
The best predictor of current investment at the firm level is lagged investment. This lagged-investment e§ect is empirically more important than the cash-flow and Q e§ects combined. We show that the specification of investment adjustment costs proposed by Christiano, Eichenbaum and Evans (2005) predicts the presence of a lagged-investment e§ect and that a generalized version of their model is consistent with the behavior of firmlevel data from Compustat. J.E.L. Classification: D9, E22.
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