Using a firm-level panel data set I assess whether dynamic models of investment provide an empirically fruitful … not been considered in previous studies on investment even though most (if not all) panel data sets on firms are … tax rate was partly compensated for by stricter depreciation allowances. Investment dynamics appear to be crucial for the …

-2000 sample, the initial response of investment to a productivity shock with responses in the top quartile is 60% higher than the … 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 …