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| Author: | Gomme, P. Kydland, F. E. Rupert, P. |
| Title: | Home Production Meets Time to Build |
| Journal: | Journal of Political Economy
2001 : OCT, VOL. 109:5, p. 1115-1131 |
| Index terms: | PRODUCTION HOME WORKING ECONOMIC CONDITIONS ANALYTICAL REVIEW MODELS |
| Language: | eng |
| Abstract: | An innovation in this paper is to introduce a time-to-build technology for the production of market capital into a model with home production. With time to build, initiating a market investment project in the current period yields useful capital several periods hence. Furthermore, starting project today implies a commitment of resources to this project not only in the current period but in all periods leading to completion of the project. The authors' main finding is that the two anomalies that have plagued all household production models-the positive correlation between business and household investment, and household investment's leading business investment over the business cycle-are resolved when time to build is added. |
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