Eberly, Janice; Rebelo, Sergio; Vincent, Nicolas - In: Journal of Monetary Economics 59 (2012) 4, pp. 370-380
The best predictor of current investment at the firm level is lagged investment. This lagged-investment effect is empirically more important than the cash-flow and Q effects combined. We show that the specification of investment adjustment costs proposed by Christiano et al. (2005) predicts the...