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http://hdl.handle.net/10016/15707
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| Title: | Corporate investment, irreversibilities and lumpiness : an empirical model |
| Author(s): | Alonso-Borrego, César [alonso1]
Sánchez Mangas, Rocío |
| Issued date: | 15-Feb-2008 |
| URI: | http://hdl.handle.net/10016/15707 |
| Abstract: | We study the role of irreversibility and non convexities in firm investment decisions. For such purpose, we posit a dynamic structural investment model with irreversibility and nonconvex adjustment costs. We focus on the firm decision about whether to invest or not, which is characterized by means of a discrete choice dynamic programming problem. The adjustment cost parameters behind the investment decision are estimated with a longitudinal sample of Spanish manufacturing firms between 1990 and 2002. For these firms, we confirm that inaction and investment episodes account for a significant fraction of them. As estimation procedure, we apply the Nested Pseudo-Likelihood (NPL) algorithm by Aguirregabiria and Mira (2002). |
| Sponsor: | We acknowledge research funding from Ministry of Education, Grants No. SEJ2006-05710/ECON and SEJ2006- 04957/ECON, respectively. The second author also thanks funding form Comunidad de Madrid, Grant No. CCG07-UAM/HUM-1918 |
| Keywords: | Capital adjustment costs
Irreversible investment
Structural estimation
Discrete choice models
Dynamic programming
Nested algorithms |
| JEL Classification: | C25
C23
C13
D21 |
| Appears in Collections: | Economists Online
DE - Otros documentos
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