A Q-theory model with lumpy investment

Economic Theory

Volumn 57, Issue 1, 2014, Pages 133-159

  Miao, Jianjun ^a,b,c   Wang, Pengfei ^d  

^a Boston University   (United States)

^b CENTRAL UNIVERSITY OF FINANCE AND ECONOMICS   (China)

^c ZHEJIANG UNIVERSITY   (China)

^d HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY   (Hong Kong)

Author keywords

Adjustment costs; Business cycles; General equilibrium; Generalized (S, s) rule; Lumpy investment; Marginal Q

Indexed keywords

EID: 84922430896     PISSN: 09382259     EISSN: 14320479     Source Type: Journal    
DOI: 10.1007/s00199-013-0794-7     Document Type: Article

References (43)

1. Abel, A.B.: Investment and the Value of Capital. Garland, New York (1979)
2. Abel, A.B., Eberly, J.C.: A unified model of investment under uncertainty. Am. Econ. Rev. 84, 1369-1384 (1994)
3. Abel, A.B., Eberly, J.C.: The mix and scale of factors with irreversibility and fixed costs of investment. In: McCallum, B. Plosser, C. (eds.), Carnegie-Rochester Conference Series on Public Policy 48, 101-135 (1998)
4. Bachmann, R., Caballero, R., Engel, E.: Aggregate implications of lumpy investment: new evidence and a DSGE model, NBER working paper No. 12336 (2008)
5. Barlevy, G.: The cost of business cycles under endogenous growth. Am. Econ. Rev. 94, 964-990 (2004)
6. Baxter, M., Crucini, M.J.: Explaining saving-investment correlations. Am. Econ. Rev. 83, 416-436 (1993)
7. Bernanke, B., Gertler, M., Gilchrist, S.: Financial accelerator in a quantitative business cycle framework. In: Taylor, J.,Woodford, M. (eds.) Handbook of Macroeconomics. Elsevier Science, Amsterdam (1999)
8. Boldrin, M., Christiano, L.J., Fisher, J.D.: Habit persistence, asset returns and the business cycle. Am. Econ. Rev. 91, 149-166 (2001)
9. Caballero, R., Engel, E.: Explaining investment dynamics in U.S. manufacturing: a generalized (S, s) approach. Econometrica 67, 783-826 (1999)
10. Caballero, R., Engel, E.,Haltiwanger, J.: Plant-level adjustment and aggregate investment dynamics. Brookings Pap. Econ. Act. 2, 1-54 (1995)
11. Caballero, R., Leahy, J.: Fixed Costs: The Demise of Marginal q., NBER working paper No. 5508 (1996)
12. Calvo, G.A.: Staggered prices in a utility maximizing framework. J. Mon. Econ. 12, 383-398 (1983)
13. Caplin, A., John Leahy, J.: State-dependent pricing and the dynamics of money and output. Q. J. Econ. 106, 683-708 (1991)
14. Caplin, A., John Leahy, J.: Aggregation and optimization with state-dependent pricing. Econometrica 65, 601-627 (1997)
15. Caplin, A., Leahy, J.: On the relationship between representative agent models and (S, s) models. In: Ito and Rose, Productivity, East Asia Seminar on Economics, vol. 13, pp. 351-376. University of Chicago Press, Chicago (2004)
16. Caplin, A., Leahy, J.: Equilibrium in a durable goods market with lumpy adjustment. J. Econ. Theory 128, 187-203 (2006)
17. Caplin, A., Spulber, D.: Menu costs and the neutrality of money. Q. J. Econ. 102, 703-725 (1986)
18. Christiano, L., Eichenbaum, M., Rebelo, S.: When is the government spending multiplier large? J. Polit. Econ. 119, 78-121 (2011)
19. Cooper, R., Haltiwanger, J.: On the nature of capital adjustment costs. Rev. Econ. Stud. 73, 611-634 (2006)
20. Cooper, R., Haltiwanger, J., Power, L.: Machine replacement and the business cycle: lumps and bumps. Am. Econ. Rev. 89, 921-946 (1999)
21. Doms, M., Dunne, T.: Capital adjustment patterns in manufacturing plants. Rev. Econ. Dyn. 1, 409-429 (1998)
22. Dotsey, M., King, R.G., Wolman, A.: State dependent pricing and the general equilibrium dynamics of money and output. Q. J. Econ. 104, 655-690 (1999)
23. Gourio, F., Kashyap, A.: Investment spikes: new facts and a general equilibrium exploration. J. Mon. Econ. 54, 1-22 (2007)
24. Hayashi, F.: Tobin's marginal q and average q: a neoclassical interpretation. Econometrica 50, 213-224 (1982)
25. Herranz, N., Krasa, S. Villamil, A.P.: Entrepreneurs, risk aversion and dynamic firms, Center for Growth and Business Cycle Research Discussion Paper Series, University of Manchester, No. 189 (2013)
26. Herranz, N., Krasa, S., Villamil, A.P.: Small firms in the SSBF. Ann. Financ. 5, 341-359 (2009)
27. House, C.L.: Fixed costs and long-lived investments, working paper, University of Michigan (2008)
28. Jermann, U.J.: Asset pricing in production economies. J. Mon. Econ. 41, 257-275 (1998)
29. Khan, A., Thomas, J.: Nonconvex factor adjustments in equilibrium business cycle models: do nonlinearities matter? J. Mon. Econ. 50, 331-360 (2003)
30. Khan, A., Thomas, J.: Idiosyncratic shocks and the role of nonconvexities in plant and aggregate investment dynamics. Econometrica 76, 395-436 (2008)
31. Kiyotaki, N., Moore, J.: Credit cycles. J. Polit. Econ. 105, 211-248 (1997)
32. Krusell, P., Smith, A.: Income and wealth heterogeneity in the macroeconomy. J. Polit. Econ. 106, 867-898 (1998)
33. Lucas Jr, R.E.: Adjustment costs and the theory of supply. J. Polit. Econ. 75, 321-334 (1967)
34. Lucas Jr, R.E., Prescott, E.C.: Investment under uncertainty. Econometrica 39, 659-681 (1971)
35. Miao, J.: Corporate tax policy and long-run capital formation: the role of irreversibility and fixed costs, working paper, Boston University (2008)
36. Miao, J.,Wang, P.: Lumpy investment and corporate tax policy. J. Money Credit Bank. (forthcoming) (2013)
37. Prescott, E.C.: Theory ahead of business cycle measurement. Fed. Reserve Bank Minneapolis Q. Rev. 10, 9-22 (1986)
38. Stokey, N., Lucas, R.E., Prescott, E.C.: Recursive Methods in Economic Dynamics. Harvard University, Cambridge (1989)
39. Sveena, T., Weinke, L.: Lumpy investment, sticky prices, and the monetary transmission mechanism. J. Mon. Econ. 54, 23-36 (2007)
40. Thomas, J.: Is lumpy investment relevant for the business cycle? J. Polit. Econ. 110, 508-534 (2002)
41. Tobin, J.: A general equilibrium approach to monetary policy. J. Money Credit Bank. 1, 15-29 (1969)
42. Uzawa, H.: Time preference and the penrose effect in a two-class model of economic growth. J. Polit. Econ. 77, 628-652 (1969)
43. Wang, P., Wen, Y.: Hayashi meets Kiyotaki and Moore: a theory of capital adjustment costs. Rev. Econ. Dyn. 15, 207-255 (2012)