The lumpiness of investment activity at the plant level is a well-established fact. Previous research has suggested that such discrete and occasional adjustments have significant aggregate implications. In particular, it has been argued that changes in plants' willingness to invest in response...

Econometric partial adjustment models perform relatively well at the aggregate level; however, many kinds of microeconomic behavior involve discrete and occasional choices. Analyzing the classic employment adjustment problem, we show how a generalized partial adjustment model tractably...

When we examine a composite setting where the firm-side sluggish price adjustment central throughout New Keynesian monetary analysis is allowed to interact with the rich money demand mechanism implied by household-side inventory-theoretic portfolio management, we find that the resulting model is...

We study an economy with a time-varying distribution of production to examine the role of debt in amplifying and propagating recessions. In our model, entrepreneurs use risky, long-term debt to finance capital. Liquid assets serve as collateral and transaction costs make debt illiquid. Debt...