The CLASS model is a top-down capital stress testing framework that projects the effect of different macroeconomic … industry capital gap relative to a target ratio at different points in time under a common stressful macroeconomic scenario …. This estimated capital gap began rising four years before the financial crisis and peaked at the end of 2008. The gap has …

capital coexist with older, less productive vintages. A reduction in the cost of investment raises both the quantity and … productivity of capital simultaneously. The model induces a simple relationship between the relative price of investment goods and …