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Investment-Specific Technology Shocks and Consumption
2010
Social Science Research Network
Modern business cycle models systematically underestimate the correlation between consumption and investment. One reason for this failure is that, generally, positive investment-speci...c technology shocks induce a negative consumption response. The objective of this paper is to investigate whether a positive consumption response to investment-speci...c technology shocks can be obtained in a modern business cycle model. We ...nd that the answer to this question is yes. With a combination of
doi:10.2139/ssrn.1735427
fatcat:abvqshkjtvdnzki2libocwtduu