probability of disaster leads to a collapse of investment and a recession, an increase in risk spreads, and a decrease in the … of business cycle dynamics, especially sharp downturns in investment and output such as 2008-IV …

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 quot;extensive marginquot;) account for the bulk of … variation in aggregate investment. The number of establishments undergoing investment spikes also has independent predictive …

the model, firms are heterogeneous in productivity and make investment and financing decisions subject to capital … are unexpected and permanent, dividend payments, equity issuance, and aggregate investment rise immediately. By contrast …, when these tax cuts are unexpected and temporary, aggregate investment falls in the short run. This fall allows firms to …