TY  - JOUR
AU  - Gourio,Francois
AU  - Kashyap,Anil K
TI  - Investment Spikes: New Facts and a General Equilibrium Exploration
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13157
PY  - 2007
Y2  - June 2007
UR  - http://www.nber.org/papers/w13157
L1  - http://www.nber.org/papers/w13157.pdf
N1  - Author contact info:
Francois Gourio
Dept of Finance
Wharton School, U of Pennsylvania
3620 Locust Walk 
Philadelphia, PA 19104
Tel: 6177922066
E-Mail: fgourio@bu.edu

Anil Kashyap
Graduate School of Business
The University of Chicago
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-7260
Fax: 773/702-0458
E-Mail: anil.kashyap@gsb.uchicago.edu
AB  - Using plant-level data from Chile and the U.S. we show that investment spikes are highly pro-cyclical, so much so that changes in the number of establishments undergoing investment spikes (the "extensive margin") account for the bulk of variation in aggregate investment. The number of establishments undergoing investment spikes also has independent predictive power for aggregate investment, even controlling for past investment and sales. We re-calibrate the Thomas (2002) model (that includes fixed costs of investing) so that it assigns a prominent role to extensive adjustment.  The recalibrated model has different properties than the standard RBC model for some shocks. 
ER  -