TY - JOUR
T1 - Concentration of capital ownership and investment fluctuations
AU - Hercowitz, Zvi
N1 - Funding Information:
I thank Fatih Guvenen, Jeremy Greenwood, Yona Rubinstein, Matthew Shapiro, two referees and the editor of this journal for helpful discussions and comments, Pavel Livertovsky for research assistance, and specially Dmitri Byzalov for programming. Financial support from the Armand Hammer Fund at Tel Aviv University is also gratefully acknowledged.
PY - 2004/7
Y1 - 2004/7
N2 - This paper is motivated by the observation that investment tends to accelerate when output is around trend. The model used to explain this observation is based on the capacity-constrained production setup in Hansen and Prescott [(2001) Manuscript], where capacity is constant over time, and on capital being owned by a fraction of the agents in the economy. When capacity is reached, the capital share increases because its component from capacity ownership becomes positive. The concentration of capital ownership leads then to an acceleration of investment-generated by the desire of capital owners to smooth consumption-as well as to a deceleration of total consumption. The results from the calibrated model contribute, although only partially, to the explanation of the observed behavior.
AB - This paper is motivated by the observation that investment tends to accelerate when output is around trend. The model used to explain this observation is based on the capacity-constrained production setup in Hansen and Prescott [(2001) Manuscript], where capacity is constant over time, and on capital being owned by a fraction of the agents in the economy. When capacity is reached, the capital share increases because its component from capacity ownership becomes positive. The concentration of capital ownership leads then to an acceleration of investment-generated by the desire of capital owners to smooth consumption-as well as to a deceleration of total consumption. The results from the calibrated model contribute, although only partially, to the explanation of the observed behavior.
UR - http://www.scopus.com/inward/record.url?scp=3242672681&partnerID=8YFLogxK
U2 - 10.1016/j.red.2003.12.004
DO - 10.1016/j.red.2003.12.004
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AN - SCOPUS:3242672681
SN - 1094-2025
VL - 7
SP - 668
EP - 686
JO - Review of Economic Dynamics
JF - Review of Economic Dynamics
IS - 3
ER -