Type

Working Paper

Authors

Stacey Tevlin
Karl Whelan

Subjects

Economics

Topics
cost of capital traditional models investment computers united states economic conditions investments mathematical models depreciation capital investments united states

Explaining the investment boom of the 1990s (2000)

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.
Collections Ireland -> University College Dublin -> School of Economics
Ireland -> University College Dublin -> College of Social Sciences and Law
Ireland -> University College Dublin -> Economics Research Collection

Full list of authors on original publication

Stacey Tevlin, Karl Whelan

Experts in our system

1
Karl Whelan
University College Dublin
Total Publications: 69