Reexamining the cyclical behavior of the relative price of investment

- We study the cyclical behavior of the relative price of investment goods in the US since 1960.
- There is no robust evidence that this relative price is countercyclical.
- Post 1983, the relative price of investment appears predominantly procyclical.
- Looking at disaggregated series, most measures are procyclical.
- This procyclical behavior is also found for the six other countries of the G7.

We document the cyclical behavior of the relative price of investment goods for the US economy over the last fifty years. There is no robust evidence that this relative price is countercyclical. For the post-1983 period, it is predominantly procyclical.