Journal of monetary economics, 2013, Vol.60(7), pp. 821-834
To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jmoneco.2013.08.003 Byline: Michael Reiter, Tommy Sveen, Lutz Weinke Abstract: The lumpy nature of plant-level investment is generally not taken into account in the context of New Keynesian monetary theory (see, e.g., Christiano et al., 2005; Woodford, 2005). Our main result shows that if this theory is augmented by a standard model of lumpy investment, monetary policy shocks lead to large but very short-lived impacts on output and inflation, in a way that goes against empirical evidence and the consensus view in the literature. Author Affiliation: (a) Institute for Advanced Studies, Department of Economics, Stumpergasse 56, A-1060 Vienna, Austria (b) Department of Economics, BI Norwegian Business School, Nydalsveien 37, N-0484 Oslo, Norway (c) Humboldt-Universitat zu Berlin, School of Business and Economics, Institute of Economic Policy, Spandauer Stra[sz]e 1, D-10099 Berlin, Germany Article History: Received 20 April 2011; Revised 21 August 2013; Accepted 22 August 2013 Article Note: (footnote) [star] The first version of this paper was circul ated as Norges Bank Working Paper 2009/05 under the title "Lumpy Investment and State-Dependent Pricing in General Equilibrium".
Monetary Policy -- Analysis ; Monetary Systems -- Analysis;
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