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Idiosyncratic Shocks, Lumpy Investment and the Monetary Transmission Mechanism
[working paper]
Corporate Editor
Institut für Höhere Studien (IHS), Wien
Abstract Standard (S,s) models of lumpy investment allow us to match many aspects of the micro data, but it is well known that the implied interest rate sensitivity of investment is unrealistically large. The monetary transmission mechanism is therefore a particularly clean experiment to assess the macroecon... view more
Standard (S,s) models of lumpy investment allow us to match many aspects of the micro data, but it is well known that the implied interest rate sensitivity of investment is unrealistically large. The monetary transmission mechanism is therefore a particularly clean experiment to assess the macroeconomic relevance of any investment theory. Our results show that lumpy investment can coexist with a realistic monetary transmission mechanism, but that we are nevertheless still a step away from a micro-founded theory of monetary policy.... view less
Keywords
investment; macroeconomics; monetary policy; interest (on money)
Classification
Economic Policy
Document language
English
Publication Year
2020
City
Wien
Page/Pages
27 p.
Series
IHS Working Paper, 16
Status
Published Version; reviewed