TY  - BOOK
AU  - Fishman,Arthur
AU  - Jovanovic,Boyan
ED  - National Bureau of Economic Research.
TI  - Obsolescence of Capital and Investment Spikes
T2  - NBER working paper series
PY  - 2020///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - October 2020; Hardcopy version available to institutional subscribers
N2  - The prospect of capital obsolescence inhibits investment. Investors thus become more optimistic when the obsolescence of their capital slows down. We propose a model with no fixed costs of investment, and random technological progress that induces obsolescence of capital in place. Spikes occur precisely when technological progress slows down. Moreover, the more variable the progress, the larger are the spikes. Cross-industry data show that where price of capital declines are more variable, investment spikes are larger
UR  - https://www.nber.org/papers/w28017
UR  - http://dx.doi.org/10.3386/w28017
ER  -