Resumen de Extensive and intensive investment over the business cycle

Boyan Jovanovic, Peter L. Rousseau

• Investment of US firms responds asymmetrically to Tobin�s Q: investment of established firms��intensive� investment�reacts negatively to Q whereas investment of new firms��extensive� investment�responds positively and elastically to Q. This asymmetry, we argue, reflects a difference between established and new firms in the cost of adopting new technologies. A fall in the compatibility of new capital with old capital raises measured Q and reduces the incentive of established firms to invest. New firms do not face such compatibility costs and step up their investment in response to the rise in Q.