smoothing in the investment response to aggregate shocks. The remaining 40% is explained by general equilibrium forces. The … particular, booms feed into themselves. The longer an expansion, the larger the response of investment to an additional positive … shock. Conversely, a slowdown after a boom can lead to a long lasting investment slump, which is unresponsive to policy …

persistent decline in investment. Moreover, the territorial dispute has led to persistent pessimism in these firms' expectations … about future sales, which can explain 60% of the overall decline in investment. …