American Economic Review Vol. 92 No. 1 2002
Plant-Level Irreversible Investment and Equilibrium Business Cycles
open access
Abstract
This paper evaluates the importance of microeconomic irreversibilities for aggregate dynamics using a real-business-cycle (RBC) model characterized by investment irreversibilities at the establishment level. The main finding is that investment irreversibilities do not play a significant role in an otherwise standard real-business-cycle model: Even though investment irreversibilities are crucial for establishment-level dynamics, aggregate fluctuations are basically the same under fully flexible or completely irreversible investment.
- DOI
- 10.1257/000282802760015667
- Volume
- 92
- Issue
- 1
- Pages
- 181-197
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib