Nolan, C. and Thoenissen, C. (2008) Labour markets and firm-specific capital in New Keynesian general equilibrium models. Journal of Macroeconomics, 30(3), pp. 817-843. (doi: 10.1016/j.jmacro.2007.02.002)
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Abstract
This paper examines the consequences of introducing firm-specific capital into a selection of commonly used sticky price business cycle models. We find that modelling firm-specific capital markets greatly reduces the response of inflation to changes in average real marginal cost. Calibrated to US data, we find that models with firm-specific capital generate a less volatile, as well as more persistent series for inflation than those which assume an economy wide market for capital. Overall, it is not clear if assuming firm-specific capital helps our models match the US business cycle data.
| Item Type: | Articles |
|---|---|
| Status: | Published |
| Refereed: | Yes |
| Glasgow Author(s) Enlighten ID: | Nolan, Professor Charles |
| Authors: | Nolan, C., and Thoenissen, C. |
| College/School: | College of Social Sciences > Adam Smith Business School > Economics |
| Journal Name: | Journal of Macroeconomics |
| Publisher: | Elsevier Inc. |
| ISSN: | 0164-0704 |
| ISSN (Online): | 1873-152X |
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