technology used to produce human capital is identical to the technologies used to produce consumption and investment goods, and …

state. When all agents expect growth to be slow, the returns on investment are low, and little investment takes place. This … slows growth and confirms the prediction that the returns on investment will be low. But if agents expect fast growth …, investment is high, returns are high, and growth is rapid. This expectational indeterminacy is induced by complementarity between …

major intermediate input into expanding plant capacity, investment goods, is coutercyclical. The ratio of these prices is … expanding plant capacity by installing investment goods (`adjustment costs'). Also, its numerator and denominator have such … technology for producing investment goods. The adjustment costs cause the two prices to respond differently to these two shocks …