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Full-Text Articles in Macroeconomics
Uncertainty, Depreciation And Industry Growth, Roberto Samaiego, Juliana Yu Sun
Uncertainty, Depreciation And Industry Growth, Roberto Samaiego, Juliana Yu Sun
Research Collection School Of Economics
When investment is irreversible, firms invest only when the mismatch between their productivity and their capital stock is large. This suggests that two factors should be related to the frequency of mismatch: volatility and capital depreciation. A canonical model of industry dynamics with investment irreversibility displays slow growth in times of high uncertainty, and decline is particularly pronounced in industries where capital depreciation is rapid. A differences-in-differences regression using industry growth data from a large sample of countries supports this result.
Macroeconomic Effects Of Energy Price Shocks On The Business Cycle, Bao Tan Huynh
Macroeconomic Effects Of Energy Price Shocks On The Business Cycle, Bao Tan Huynh
Research Collection School Of Economics
This paper proposes a framework of endogenous energy production with convex costs to investigate the general equilibrium effects of energy price shocks on the business cycle. This framework explicitly models the consumption of durables and nondurables and implements a high complementarity between energy and the usage of durables and capital. The model predicts energy price elasticities of various consumption variables that fall within reasonable agreement with empirical estimates. Convex costs in energy production produce energy price and energy supply dynamics that tallies well with empirical behavior. Our analysis confirms in a theoretical setting recent observations that not all energy price …