TY  - UNPD
A1  - Verona, Fabio
T1  - Lumpy investment in sticky information general equilibrium
T2  - Working paper series / Institute for Monetary and Financial Stability ; 55
N2  - In this paper, I introduce lumpy micro-level capital adjustment into a sticky information general equilibrium model. Lumpy adjustment arises because of inattentiveness in capital investment decisions instead of the more common assumption of non-convex adjustment costs. The model features inattentiveness as the only source of stickiness. I find that the model with lumpy investment yields business cycle dynamics which differ substantially from those of an otherwise identical model with frictionless investment and are much more consistent with the empirical evidence. These results therefore strengthen the case in favour of the relevance of microeconomic investment lumpiness for the business cycle.
T3  - Working paper series / Institute for Monetary and Financial Stability - 55 
KW  - sticky information
KW  - general equilibrium
KW  - lumpy investment
KW  - business cycle
Y1  - 2012
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/26868
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-268682
UR  - http://www.imfs-frankfurt.de/fileadmin/user_upload/pdf/WP_55.pdf
N1  - This paper is based on a chapter of my PhD dissertation. Part of this paper was written during my traineeship at the ECB's Monetary Policy Strategy Division, whose hospitality I gratefully acknowledge. The first version of this paper was circulated as CEF:UP Working Paper No 2011-02.
ER  -