Paper #702

Títol:

Inflation and output dynamics with firm-owned capital

Autors:

Lutz Weinke i Tommy Sveen

Data:

Juliol 2003

Resum:

We model firm-owned capital in a stochastic dynamic New-Keynesian general equilibrium model à la Calvo. We find that this structure implies equilibrium dynamics which are quantitatively di¤erent from the ones associated with a benchmark case where households accumulate capital and rent it to firms. Our findings therefore stress the importance of modeling an investment decision at the firm level–in addition to a meaningful price setting decision. Along the way we argue that the problem of modeling firm-owned capital with Calvo price-setting has not been solved in a correct way in the previous literature.

Paraules clau:

Monetary policy shocks, sticky prices, investments

Codis JEL:

E22, E31

Àrea de Recerca:

Macroeconomia i Economia Internacional

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