Explaining the Investment Boom of the 1990s

  • Tevlin S
  • Whelan K
  • 20

    Readers

    Mendeley users who have this article in their library.
  • 36

    Citations

    Citations of this article.

Abstract

Real equipment investment in the United States boomed in the 1990s, led by soaring investment in computers. We find that traditional aggregate econometric models completely fail to capture the magnitude of this growth-mainly because these models neglect to address two features that were crucial (and unique) to the 1990s' investment boom. First, the pace at which firms replace depreciated capital increased. Second, investment was more sensitive to the cost of capital. We document that these two features stem from the special behavior of investment in computers and therefore propose a disaggregated approach. This produces an econo- metric model that successfully explains the 1990s' equipment invest- ment boom.

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document

Authors

  • Stacey Tevlin

  • Karl Whelan

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free