Investment Dynamics

Thomas Winberry

A method for solving heterogeneous-agent models with aggregate shocks that replaces the infinite-dimensional distribution with a flexible parametric family, treats that family's moments as endogenous …

Jason G. Cummins · Kevin A. Hassett · R. Glenn Hubbard

Cummins, Hassett, and Hubbard argue that standard tests of neoclassical investment models (tax-adjusted q and the user cost of capital) have performed poorly mainly because of severe measurement error …

Pablo Ottonello

Physical capital, like labour, can be "unemployed" — sitting idle while its owner searches for a buyer or tenant — and this paper documents that in the United States such idle capital is large, …

Federico Apicella · Andrea Fabiani

Using the November 2017 EU Emissions Trading System reform, which pushed permit prices from about 5 to 20 euros per tonne, and loan-level data from the Italian Credit Registry, this paper asks whether …

Aubhik Khan · Julia K. Thomas

This 2008 *Econometrica* paper (circulated as NBER Working Paper 12845, January 2007) revisits whether "lumpy" plant-level investment -- infrequent, large capital adjustments driven by nonconvex …

Aimé Bierdel · Andres Drenik · Juan Herreño · Pablo Ottonello

The paper develops a quantitative capital-accumulation model in which capital trades in illiquid markets with asymmetric information — sellers know the quality of their capital but buyers do not. It …

François Gourio · Anil K. Kashyap

Plant-level data from Chile and the U.S. show that swings in aggregate investment come almost entirely from changes in how many establishments are having an investment spike, not how big those spikes …

Jeremy Greenwood · Zvi Hercowitz · Gregory W. Huffman

Keynes's idea that shocks to the marginal efficiency of investment drive fluctuations is placed inside a neoclassical model in which firms choose how hard to run their capital; a shock that raises the …

Jeremy Greenwood · Zvi Hercowitz · Per Krusell

This paper asks how much of postwar U.S. economic growth came from investment-specific technological change -- cheaper, more efficient new equipment -- as opposed to ordinary (Hicks-neutral) …

Christopher L. House · Matthew D. Shapiro

This paper by Christopher House and Matthew Shapiro (AER 2006; NBER WP 10415, April 2004) uses a dynamic general equilibrium model to quantify how the *timing* of a legislated tax-rate change -- not …

Franco Modigliani · Merton H. Miller

Modigliani and Miller develop an "operational" theory of a firm's cost of capital under uncertainty, built on firms grouped into equivalent-risk classes and on the condition that investors can freely …

Anusha Chari · Jennifer Rhee

Measured firm by firm from accounting and stock-market data rather than imputed from national accounts, the marginal product of capital really is higher in poorer countries -- but inflation-adjusted …

Lawrence J. Christiano · Richard M. Todd

Investment projects begin with a long planning phase that consumes very little in the way of resources, and building that phase into an otherwise standard real business cycle model delays the response …

Fumio Hayashi

Tobin's conjecture that investment depends on marginal q is derived from a general present-value-maximising firm problem with installation costs, giving an investment rule that depends on neither the …