Obsolescence of Capital and Investment Spikes

Obsolescence of Capital and Investment Spikes

The prospect of capital obsolescence inhibits investment. Investors thus become more optimistic when the obsolescence of their capital slows down. We propose a model with no fixed costs of investment, and random technological progress that induces obsolescence of capital in place. Spikes occur preci...

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Veröffentlicht in:American economic journal. Microeconomics 2021-11, Vol.13 (4), p.135-171
Hauptverfasser: Fishman, Arthur, Jovanovic, Boyan
Format: Artikel
Sprache:eng
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1947–1999
Dauer
Investition
Kapital
Technischer Fortschritt
USA
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container_title American economic journal. Microeconomics
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creator Fishman, Arthur
Jovanovic, Boyan
description The prospect of capital obsolescence inhibits investment. Investors thus become more optimistic when the obsolescence of their capital slows down. We propose a model with no fixed costs of investment, and random technological progress that induces obsolescence of capital in place. Spikes occur precisely when technological progress slows down. Moreover, the more variable the progress, the larger are the spikes. Cross-industry data show that where price of capital declines are more variable, investment spikes are larger.
doi_str_mv 10.1257/mic.20190062
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identifier ISSN: 1945-7669
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1945-7685
language eng
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source JSTOR Archive Collection A-Z Listing; American Economic Association Web
subjects 1947–1999
Dauer
Investition
Kapital
Technischer Fortschritt
USA
title Obsolescence of Capital and Investment Spikes
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