Explaining the investment boom of the 1990s

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Title: Explaining the investment boom of the 1990s
Authors: Tevlin, Stacey
Whelan, Karl
Permanent link: http://hdl.handle.net/10197/245
Date: 7-Feb-2000
Online since: 2008-06-13T15:40:35Z
Abstract: Real equipment investment in the United States has boomed in recent years, led by soaring investment in computers. We find that traditional aggregate econometric models completely fail to capture the magnitude of this recent growth - mainly because these models neglect to address two features that are crucial (and unique) to the current investment boom. First, the pace at which firms replace depreciated capital has increased. Second, investment has been more sensitive to the cost of capital. We document that these two features stem from the special behavior of investment in computers and therefore propose a disaggregated approach. This produces an econometric model that successfully explains the 1990s equipment investment boom.
Type of material: Working Paper
Publisher: Federal Reserve
Series/Report no.: Finance and Economics Discussion Series; No. 2000-11
Keywords: InvestmentCost of capitalDepreciationComputers
Subject LCSH: Capital investments--United States
Investments--Mathematical models
United States--Economic conditions
DOI: 10.2139/ssrn.221415
Other versions: http://dx.doi.org/10.2139/ssrn.221415
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Research Collection

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