Paper #702

Título:

Inflation and output dynamics with firm-owned capital

Autores:

Lutz Weinke y Tommy Sveen

Fecha:

Julio 2003

Resumen:

We model firm-owned capital in a stochastic dynamic New-Keynesian general equilibrium model � 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.

Palabras clave:

Monetary policy shocks, sticky prices, investments

Códigos JEL:

E22, E31

Área de investigación:

Macroeconomía y Economía Internacional

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