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Decomposing the Cyclical Movements in the Real Price of Equipment
oleh: Kwang Hwan Kim
| Format: | Article |
|---|---|
| Diterbitkan: | Korea Institute for International Economic Policy 2009-06-01 |
Deskripsi
This paper raises warning flags about the current use of the real price of equipment as the driving process for investment-specific technology in the Real-Business-Cycle (RBC) model. Using a structural VAR approach, this paper finds that a significant fraction of the real price of equipment is accounted for by other shocks besides investment-specific technology shocks (I-shocks). This finding indicates that the current RBC models which use the real price of equipment as the driving process of investment-specific technology might overstate the contribution of I-shocks to economic fluctuations.