Asset returns and business cycles in models with investment adjustment costs

Asset returns and business cycles in models with investment adjustment costs

We show that adjustment cost models with labor supply can explain both asset returns and business cycle facts when adjustment costs penalize the changes of investment. This conclusion stands in contrast to results obtained in the literature with adjustment costs that penalize the changes of capital.

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Veröffentlicht in:Economics letters 2005, Vol.86 (1), p.141-146
Hauptverfasser: Beaubrun-Diant, Kevin E., Tripier, Fabien
Format: Artikel
Sprache:eng
Schlagworte:
Adjustment costs
Asset returns
Business cycles
Economic models
Employment
Investment
Labour supply
Model testing
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Beschreibung
Zusammenfassung:We show that adjustment cost models with labor supply can explain both asset returns and business cycle facts when adjustment costs penalize the changes of investment. This conclusion stands in contrast to results obtained in the literature with adjustment costs that penalize the changes of capital.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2004.07.007