Bachmann, Ruediger; Caballero, Ricardo J.; Engel, Eduardo - Cowles Foundation for Research in Economics, Yale University - 2008
The sensitivity of U.S. aggregate investment to shocks is procyclical: the response upon impact increases by approximately 50% from the trough to the peak of the business cycle. This feature of the data follows naturally from a DSGE model with lumpy microeconomic capital adjustment. Beyond...