Interaction-based Foundation of Aggregate Investment Shocks
Nirei, Makoto
WP#13-04 Hitotsubashi University IIR (2013/03/08)
This paper demonstrates that the interactions of rm-level indivisible investments give rise to aggregate uctuations without aggregate exogenous shocks. I develop a method to derive the distribution of the aggregate capital growth rate by embedding a ctitious tatonnement in a branching process. This method shows that idiosyncratic …