This paper adopts Keynes' view that shocks to the marginal efficiency of i nvestment are important for business fluctuations, but incorporates i t in a neoclassical framework with endogenous capacity utilization. I ncreases in the efficiency of newly produced investment goods stimula te the...

The role that investment-specific technological change played in generating postwar U.S. growth is investigated here. The premise is that the introduction of new, more efficient capital goods is an important source of productivity change and an attempt is made to disentangle its effects from the...

A Beckerian model of household production is developed to study the cyclical allocation of capital and time between market and home activities. The adopted framework treats the business and household sectors symmetrically. In the market, labor interacts with business capital to produce market...

This paper is motivated by the observation that investment tends to accelerate when output is around trend. The model used to explain this observation is based on the capacity-constrained production setup in Hansen and Prescott (2001), where capacity is constant over time, and on capital being...

The effects of equipment investment on relative wages and employment of skilled labor are estimated. The basic hypothesis is that such effects are positive, due to the presence of either equipment-skill complementarity or skill advantage in technology adoption. Using a panel data set for a wide...

This paper examines the effects of expected inflation on the responsiveness of output to nominal disturbances in the framework of a localized markets model. The mechanism described in the theoretical part of the paper is that expected inflation has a positive effect on the transaction frequency,...