We study the effects of money (anticipated inflation) on capital formation. Previous papers on this topic adopt reduced …

We introduce adaptive learning behavior into a general equilibrium lifecycle economy with capital accumulation. Agents … form forecasts of the rate of return to capital assets using least squares autoregressions on past data. We show that, in … persistent excess volatility in returns to capital. We explore a quantitative case for these learning equilibria. We use an …

The standard measures of nominal capital formation show the United States investing a proportion of GDP much lower than … have been coming closer and closer to those of the other countries. A broader measure of capital formation, more consonant … investing an above average share of total output in the most recent period 1990-1994. Real capital formation per capita and per …

What is the optimal policy response to a negative sectoral shock? How do frictions in goods and labor markets affect … that can be used to produce government capital. For a reasonable calibration, we find that government spending increases in … larger the costs that the economy faces to reallocate resources (capital and labor) across sectors, the smaller the optimal …

additional form of capital spending-that of improvements. The analysis examines a unique long-run data set on Swiss road spending. …

Conventional theory suggests that fiat money will have value in capital-poor economies. We demonstrate that fiat money … may also have value in capital-rich economies, if the price of capital is excessively volatile. Excess asset … short-run return to capital. One advantage of fiat money is that its expected return is not linked directly to news …

taste shocks affecting their marginal utility of current consumption. Agents accumulate capital and have access to a … technology to produce goods. The framework deviates from previous literature, which assumed that (i) there is a continuum of …