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On the Nature of Capital Adjustment Costs
Abstract
This paper studies the nature of capital adjustment at the plant level. We use an indirect inference procedure to estimate the structural parameters of a rich specification of capital adjustment costs. In effect, the parameters are optimally chosen to reproduce a set of moments that capture the non-linear relationship between investment and profitability found in plant-level data. Our findings indicate that a model, which mixes both convex and non-convex adjustment costs, fits the data best.
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Citations
Cited by
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Hsieh, C.-T., & Klenow, P. J. (2009) · SSRN Electronic Journal · doi:10.2139/ssrn.1442871 · Cited by 1,444
Really Uncertain Business Cycles
Bloom, N., Floetotto, M., Jaimovich, N., Saporta-Eksten, I., & Terry, S. J. (2018) · Econometrica · doi:10.3982/ecta10927 · Cited by 1,120
Do financing constraints matter for R&D?
Brown, J. R., Martinsson, G., & Petersen, B. C. (2012) · European Economic Review · doi:10.1016/j.euroecorev.2012.07.007 · Cited by 811
The effects of financial reporting and disclosure on corporate investment: A review
Roychowdhury, S., Shroff, N., & Verdi, R. S. (2019) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2019.101246 · Cited by 749
The Corporate Propensity to Save
RIDDICK, L. A., & WHITED, T. M. (2009) · The Journal of Finance · doi:10.1111/j.1540-6261.2009.01478.x · Cited by 710
Metadata
- Authors
- COOPER, R. W., & HALTIWANGER, J. C.
- Venue
- Review of Economic Studies
- Publisher
- Oxford University Press (OUP)
- Published
- 2006-07
- Volume
- 73
- Issue
- 3
- Pages
- 611-633
- ISSN
- 0034-6527 (ISSN-L)
- 1467-937X
- OpenAlex
- W2891474450
- Cited by
- 1,134
- References
- 0
- FWCI
- 67.55
- Type
- journal article
- Language
- en
- Open access
- closed
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
