The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment
Autor(a) principal: | |
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Data de Publicação: | 1997 |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10362/89006 |
Resumo: | This paper investigates the role of variable utilization rates for capital in the context of a Real Business Cycle model with shocks to the marginal efficiency of investment. This type of shock induces a negative correlation between consumption and investment and a high volatility of the stock of capital. 1 find that procyclical capital utilization - despite shifting income and moving consumption and investment in the same direction - cannot solve these problems, and that specific assumptions about the utility specification are necessary to get the model moments in line with the data. The same model with constant capital utilization obtains more positive correlations between consumption and investment. Finally, no utility specification seems to reduce the high volatility of the capital stock, Even if shocks enter the model through the conventional technology channel, the transmission of these shocks to the depreciation rate of capital generates an excessive volatility of this stock when compared to the data. |
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The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of InvestmentThis paper investigates the role of variable utilization rates for capital in the context of a Real Business Cycle model with shocks to the marginal efficiency of investment. This type of shock induces a negative correlation between consumption and investment and a high volatility of the stock of capital. 1 find that procyclical capital utilization - despite shifting income and moving consumption and investment in the same direction - cannot solve these problems, and that specific assumptions about the utility specification are necessary to get the model moments in line with the data. The same model with constant capital utilization obtains more positive correlations between consumption and investment. Finally, no utility specification seems to reduce the high volatility of the capital stock, Even if shocks enter the model through the conventional technology channel, the transmission of these shocks to the depreciation rate of capital generates an excessive volatility of this stock when compared to the data.Nova SBERUNEjarque, João2019-12-02T10:28:24Z1997-111997-11-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10362/89006engEjarque, João, The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment (November, 1997). FEUNL Working Paper Series No. 310info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-03-11T04:39:28Zoai:run.unl.pt:10362/89006Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-20T03:36:53.859158Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment |
title |
The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment |
spellingShingle |
The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment Ejarque, João |
title_short |
The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment |
title_full |
The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment |
title_fullStr |
The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment |
title_full_unstemmed |
The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment |
title_sort |
The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment |
author |
Ejarque, João |
author_facet |
Ejarque, João |
author_role |
author |
dc.contributor.none.fl_str_mv |
RUN |
dc.contributor.author.fl_str_mv |
Ejarque, João |
description |
This paper investigates the role of variable utilization rates for capital in the context of a Real Business Cycle model with shocks to the marginal efficiency of investment. This type of shock induces a negative correlation between consumption and investment and a high volatility of the stock of capital. 1 find that procyclical capital utilization - despite shifting income and moving consumption and investment in the same direction - cannot solve these problems, and that specific assumptions about the utility specification are necessary to get the model moments in line with the data. The same model with constant capital utilization obtains more positive correlations between consumption and investment. Finally, no utility specification seems to reduce the high volatility of the capital stock, Even if shocks enter the model through the conventional technology channel, the transmission of these shocks to the depreciation rate of capital generates an excessive volatility of this stock when compared to the data. |
publishDate |
1997 |
dc.date.none.fl_str_mv |
1997-11 1997-11-01T00:00:00Z 2019-12-02T10:28:24Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10362/89006 |
url |
http://hdl.handle.net/10362/89006 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
Ejarque, João, The Correlation Between Consumption and Investment in a Model of Variable Capital Utilization With Shocks to the Marginal Efficiency of Investment (November, 1997). FEUNL Working Paper Series No. 310 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
Nova SBE |
publisher.none.fl_str_mv |
Nova SBE |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799137986258927616 |