Nonconvex factor adjustments in equilibrium business cycle models
do nonlinearities matter?
by Aubhik Khan
"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.
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Nonconvex factor adjustments in equilibrium business cycle models: do nonlinearities matter?
2002, Federal Reserve Bank of Minneapolis
Electronic resource
in English
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Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 1/15/2005.
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Mode of access: World Wide Web.
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