Idiosyncratic Shocks, Lumpy Investment and the Monetary Transmission Mechanism

Michael Reiter, Tommy Sveen, Lutz Weinke

Research output: Contribution to journalArticlepeer-review


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 languageEnglish (US)
Pages (from-to)1037-1055
Number of pages19
JournalB.E. Journal of Macroeconomics
Issue number2
StatePublished - Jun 1 2023


  • lumpy investment
  • monetary policy
  • sticky prices

ASJC Scopus subject areas

  • Economics and Econometrics


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