Is Lumpy Investment really Irrelevant for the Business Cycle?
نویسندگان
چکیده
It is a well documented empirical fact that rm level investment is lumpy rather than smooth. In the present paper we nd that the aggregate consequences of lumpy investment in general equilibrium are quantitatively important. Earlier results stressing the irrelevance of lumpy investment in general equilibrium are therefore an artefact of assuming perfect competition combined with fully exible prices. Keywords: Lumpy Investment, Sticky Prices. JEL Classi cation: E22, E31, E32 The authors are grateful to Jordi Galí. Thanks to seminar participants at Norges Bank, North Carolina State University, and Universitat Pompeu Fabra. Special thanks to Dale Henderson, Omar Licandro, Michael Reiter, Stephanie Schmitt-Grohé, and Martín Uribe for helpful comments. The usual disclaimer applies. The views expressed in this paper are those of the authors and should not be attributed to Norges Bank. 1
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