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dc.contributor.authorSchaller, Huntleyen_US
dc.contributor.authorMoore, Bartholomewen_US
dc.description.abstractThis paper introduces a new approach to understanding investment. The distinctive feature of our approach is that shocks to the economic fundamentals have both persistent and transitory components, and that firms must disentangle the persistent from the transitory shocks. The model generates interesting dynamics. Simulations of the model show that the response of investment to changes in the interest rate can vary widely over time, that the current response of investment depends on the sequence of past shocks, that investment will respond less when the firm is confident about its beliefs and more when a change in economic fundamentals challenges the firm?s beliefs, and that investment booms and crashes may occur without any change in the true state of the economy. Simulations of the model also show that it captures many ?stylized facts? of investment dynamics documented in previous empirical studies.en_US
dc.description.otherAbstract only.-
dc.publisherHamburg Institute of International Economics (HWWA) Hamburgen_US
dc.relation.ispartofseriesHWWA Discussion Paper 77en_US
dc.subject.stwGesamtwirtschaftliche Investitionstheorieen_US
dc.subject.stwBetriebswirtschaftliche Investitionstheorieen_US
dc.subject.stwStochastischer Prozeßen_US
dc.subject.stwBetriebliche Investitionspolitiken_US
dc.titlePersistent and transitory shocks, learning, and investment dynamicsen_US
dc.typeWorking Paperen_US
Appears in Collections:HWWA Discussion Paper, Hamburgisches Welt-Wirtschafts-Archiv

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