000			02941cam a22003257 4500
001			w5260
003			NBER
005			20211020114228.0
006			m o d
007			cr cnu||||||||
008			210910s1995 mau fo 000 0 eng d
100	1		_aCooper, Russell.
245	1	0	_aMachine Replacement and the Business Cycle: _bLumps and Bumps / _cRussell Cooper, John Haltiwanger, Laura Power.
260			_aCambridge, Mass. _bNational Bureau of Economic Research _c1995.
300			_a1 online resource: _billustrations (black and white);
490	1		_aNBER working paper series _vno. w5260
500			_aSeptember 1995.
520	3		_aThis paper explores cyclical fluctuations in investment due to discrete changes in the plant's stock of capital. To do so, we focus on a machine replacement problem in which a producer decides whether to replace its entire existing stock of capital with new machinery and equipment. This decision is undertaken in a stochastic, dynamic environment which allows us to characterize the relationship between lumpy investment and the state of the aggregate economy. Our theoretical results are supplemented by numerical and empirical analyses of the dynamics of lumpy investment at the plant level and the associated aggregate implications. The dynamics are surprisingly rich since they represent the interaction between a replacement cycle, the cross sectional distribution of the age of the capital stock and the state of the aggregate economy. The empirical analysis of these dynamics is based on plant level investment data for the Longitudinal Research Database (LRD) for the 1972-91 period. Overall, we find that the frequency of lumpy investment activity is higher during periods of high economic activity and more likely the older is the capital. These empirical results are consistent with the predictions of our theoretical model. Nonetheless, the predicted path of aggregate investment that neglects the interaction of the non-flat hazard and the cross sectional distribution of the age of the capital stock tracks actual aggregate investment quite well. However, ignoring the fluctuations in the cross sectional distribution can yield predictable nontrivial errors in forecasting changes in aggregate investment in periods following large swings in aggregate investment.
530			_aHardcopy version available to institutional subscribers
538			_aSystem requirements: Adobe [Acrobat] Reader required for PDF files.
538			_aMode of access: World Wide Web.
588	0		_aPrint version record
700	1		_aHaltiwanger, John. _912288
700	1		_aPower, Laura. _918762
710	2		_aNational Bureau of Economic Research.
830		0	_aWorking Paper Series (National Bureau of Economic Research) _vno. w5260.
856	4	0	_uhttps://www.nber.org/papers/w5260
856			_yAcceso en línea al DOI _uhttp://dx.doi.org/10.3386/w5260
942			_2ddc _cW-PAPER
999			_c343092 _d301654