CAPITAL COMPLEMENTARITY, TIME-TO-BUILD, AND THE PERSISTENCE OF INVESTMENT STARTS

This paper examines the explanatory power of the ''time-to-build'' pro pagation mechanism when the mechanism is modified to take into account capital complementarity Since, in order to come ''on line,'' complete d structures require equipment and large structures may require smalle r complementary structures, the persistence of investment ''starts'' m ay be explainable in terms of such complementarity. The hypothesis is made operational using finely-detailed U.S. Commerce department survey data. Results are consistent with the hypothesis that an important ca use of ''starts'' persistence is the complementary relationship existi ng between various ''orders'' of capital.