Business Fixed Investment and the Recent Business Cycle in Japan
52 Pages Posted: 4 Oct 2010
Date Written: April 1996
To analyze business fixed investment in Japan, which has been unusually volatile in recent years, we develop and apply a loglinear flexible accelerator model. We find that movements in business fixed investment are consistent with movements in output and the tax- adjusted cost of capital, both on average during our entire 1961-94 sample and during the recent 1986-94 business cycle.
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