Working Paper: CEPR ID: DP10128
Authors: Paul Beaudry; Alban Moura; Franck Portier
Abstract: We document the cyclical behavior of several measures of the relative price of investment goods for the U.S. economy over the last fifty years. Our main result is that there is no robust evidence that this relative price is countercyclical in the data. Furthermore, for the recent (post-Volcker) period, the relative price of investment appears predominantly procyclical. When looking at more disaggregated series, most measures are procyclical, a few acyclical, and only the price of equipment is countercyclical for some periods and measures. The procyclical behavior of the relative price of aggregate investment is also found for the six other countries of the G7.
Keywords: business cycles; relative price of investment
JEL Codes: E3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Relative price of aggregate investment (E22) | Procyclical behavior (E32) |
| Demand shocks (E39) | Cyclical behavior of the relative price of investment (E32) |
| Choice of consumption price deflator (E31) | Cyclical properties of relative investment prices (E32) |
| Relative price of equipment (P22) | Countercyclical behavior (E32) |
| Relative price of investment measures (G11) | Procyclical or acyclical behavior (E32) |