discount rates and thereby raise real investment. We analyze the macroeconomic implications of sticky discount rates using a … New Keynesian model. The model naturally generates investment-consumption comovement in response to household demand … shocks and higher investment in response to government spending. Sticky discount rates imply that inflation has real effects …

model, we first show that not only hours but also investment decline temporarily following a technology improvement. This …

. We motivate our analysis with a simple model which predicts that: 1) investment and production in more concentrated … sectors are more affected by demand changes and 2) high uncertainty makes investment and production more sensitive to demand …