Nonconvex factor adjustments in equilibrium business cycle models
Subtitle: do nonlinearities matter?
By: Aubhik Khan and Julia Thomas.
Contributors: Thomas, Julia.
Series: Federal Reserve Bank of Minneapolis, Research Department staff report ;; 306; Staff report (Federal Reserve Bank of Minneapolis. Research Dept. : Online) ;; 306.
Publisher: Federal Reserve Bank of Minneapolis
Published: 2002
Place of publication: [Minneapolis, Minn.]
Language: eng
Format: Electronic resource
Description: "Recent empirical analysis has found nonlinearities to be important in understanding aggregated investment. Using an equilibrium business cycle model, we search for aggregate nonlinearities arising from the introduction of nonconvex capital adjustment costs.We find that, while such costs lead to nontrivial nonlinearities in aggregate investment demand, equilibrium investment is effectively unchanged.Our finding, based on a model in which aggregate fluctuations arise through exogenous changes in total factor productivity, is robust to the introduction of shocks to the relative price of investment goods"--Federal Reserve Bank of Minneapolis web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 1/15/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.