Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
967622 | Journal of Monetary Economics | 2014 | 15 Pages |
Abstract
Fixed costs models are difficult to analyze because they feature non-degenerate, time-varying distributions of capital across firms. If investments are sufficiently long-lived however then the cross-sectional distribution of capital holdings has virtually no bearing on the equilibrium and the aggregate behavior of fixed-cost models is essentially identical to neoclassical models. The findings are due to a near infinite elasticity of investment timing for long-lived investments - a feature shared by fixed-cost models and neoclassical models. “Irrelevance results” found in numerical studies of fixed-cost models are not parametric special cases but instead are fundamental properties of models with long-lived investment goods.
Keywords
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Economics and Econometrics
Authors
Christopher L. House,