Idiosyncratic Shocks, Lumpy Investment and the Monetary Transmission Mechanism

Michael Reiter; Tommy Sveen; Lutz Weinke

doi:10.1515/bejm-2022-0129

Idiosyncratic Shocks, Lumpy Investment and the Monetary Transmission Mechanism

Michael Reiter, Tommy Sveen, Lutz Weinke

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

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. In fact, the micro-level lumpiness in investment puts empirical discipline on the modeling of investment decisions, and this makes it hard to explain the monetary policy transmission mechanism.

Original language	English (US)
Pages (from-to)	1037-1055
Number of pages	19
Journal	B.E. Journal of Macroeconomics
Volume	23
Issue number	2
DOIs	https://doi.org/10.1515/bejm-2022-0129
State	Published - Jun 1 2023

Keywords

lumpy investment
monetary policy
sticky prices

ASJC Scopus subject areas

Economics and Econometrics

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10.1515/bejm-2022-0129

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Idiosyncratic Shocks, Lumpy Investment and the Monetary Transmission Mechanism

Abstract

Keywords

ASJC Scopus subject areas

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