The macroeconomics of irreversibility

Isaac Baley and Andrés Blanco

We study aggregate capital dynamics in an investment model with idiosyncratic productivity shocks, fixed capital adjustment costs, and irreversibility driven by a wedge between capital purchase and resale prices. We derive sufficient statistics capturing the role of investment frictions on aggregate capital fluctuations, measure these statistics with investment microdata, and exploit them to discipline the capital price wedge. Irreversibility doubles the persistence of capital fluctuations and is crucial for reconciling micro-level investment behavior with macroeconomic propagation.

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Year of publication:	[2024]
Authors:	Baley, Isaac ; Blanco, Andrés
Publisher:	Atlanta, GA : Federal Reserve Bank of Atlanta
Subject:	investment frictions \| capital price wedge \| irreversibility \| lumpiness \| fixed adjustment costs \| capital misallocation \| Tobin's q \| transitional dynamics \| inaction \| propagation \| Anpassungskosten \| Adjustment costs \| Investition \| Investment \| Kapitalkosten \| Cost of capital \| Tobins Q \| Tobin's Q \| Volkswirtschaftliche Investitionstheorie \| Theory of aggregate investment \| Makroökonomik \| Macroeconomics

Extent:	1 Online-Ressource (circa 121 Seiten) Illustrationen
Series:	Working papers / Federal Reserve Bank of Atlanta. - Atlanta, Ga. : [Verlag nicht ermittelbar], ISSN 1936-5225, ZDB-ID 2171117-3. - Vol. 2024, 17 (December 2024)
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	10.29338/wp2024-17 [DOI] hdl:10419/309188 [Handle]
Classification:	D30 - Distribution. General ; D80 - Information and Uncertainty. General ; E20 - Consumption, Saving, Production, Employment, and Investment. General ; E30 - Prices, Business Fluctuations, and Cycles. General
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10015168594