Article ID Journal Published Year Pages File Type
966508 Journal of Monetary Economics 2013 14 Pages PDF
Abstract
The lumpy nature of plant-level investment is generally not taken into account in the context of New Keynesian monetary theory (see, e.g., Christiano et al., 2005; Woodford, 2005). Our main result shows that if this theory is augmented by a standard model of lumpy investment, monetary policy shocks lead to large but very short-lived impacts on output and inflation, in a way that goes against empirical evidence and the consensus view in the literature.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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