Idiosyncratic Shocks, Lumpy Investment and the Monetary Transmission Mechanism

Reiter, MichaelORCID: https://orcid.org/0000-0001-9490-8746; Sveen, Tommy and Weinke, Lutz (May 2020) Idiosyncratic Shocks, Lumpy Investment and the Monetary Transmission Mechanism. IHS Working Paper Series 16, 27 p.

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Abstract or Table of Contents

Standard (S,s) models of lumpy investment allow us to match many aspects of the micro data, but it is well known that the implied interest rate sensitivity of investment is unrealistically large. The monetary transmission mechanism is therefore a particularly clean experiment to assess the macroeconomic relevance of any investment theory. Our results show that lumpy investment can coexist with a realistic monetary transmission mechanism, but that we are nevertheless still a step away from a micro-founded theory of monetary policy.

Item Type: IHS Series
Additional Information (public): This research was funded by the Deutsche Forschungsgemeinschaft (DFG, German Research Foundation) - 402884221, and the Fonds zur Förderung der wissenschaftlichen Forschung (FWF Austrian Science Fund) - I3840-G27.
Keywords: Lumpy Investment, Sticky Prices
Funders: DFG, German Research Foundation, FWF Austrian Science Fund
Classification Codes (e.g. JEL): E22, E31, E32
Research Units: Macroeconomics and Economic Policy
Status: Published
Date Deposited: 19 Jun 2020 09:22
Last Modified: 01 Jul 2020 07:45
URI: https://irihs.ihs.ac.at/id/eprint/5377

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