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Adjustment Costs, Irreversibility, and Investment Patterns in African Manufacturing

Arne Bigsten

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Description:This paper seeks to determine whether firm level investment behavior in the manufacturing sectors of Cameroon, Ghana, Kenya, Zambia and Zimbabwe is more accurately described by standard theory based on quadratic adjustment costs or by alternative models, based on irreversibilities or fixed costs. The importance of this issue stems first from a theoretical perspective, given that the adjustment cost function constitutes one of the cornerstones of the investment equation, and misspecification of adjustment costs is likely to yield a misspecified investment model. Second, empirically, information on the structure and size of adjustment costs is important for understanding how investment responds to changes in fundamentals. For example, some non-quadratic adjustment cost models imply that firm investment is nonlinear: periods of little response to shocks can be followed by intensive responses to both current and accumulated shocks. The structure of adjustment costs also has significant implications for understanding aggregate investment dynamics.2We have made it easy for you to find a PDF Ebooks without any digging. And by having access to our ebooks online or by storing it on your computer, you have convenient answers with Adjustment Costs, Irreversibility, and Investment Patterns in African Manufacturing. To get started finding Adjustment Costs, Irreversibility, and Investment Patterns in African Manufacturing, you are right to find our website which has a comprehensive collection of manuals listed.
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Pages: 54

Format: PDF, EPUB & Kindle Edition

Publisher: Not Avail

Release: 1999

ISBN: 6613778303

Description: This paper seeks to determine whether firm level investment behavior in the manufacturing sectors of Cameroon, Ghana, Kenya, Zambia and Zimbabwe is more accurately described by standard theory based on quadratic adjustment costs or by alternative models, based on irreversibilities or fixed costs. The importance of this issue stems first from a theoretical perspective, given that the adjustment cost function constitutes one of the cornerstones of the investment equation, and misspecification of adjustment costs is likely to yield a misspecified investment model. Second, empirically, information on the structure and size of adjustment costs is important for understanding how investment responds to changes in fundamentals. For example, some non-quadratic adjustment cost models imply that firm investment is nonlinear: periods of little response to shocks can be followed by intensive responses to both current and accumulated shocks. The structure of adjustment costs also has significant implications for understanding aggregate investment dynamics.2We have made it easy for you to find a PDF Ebooks without any digging. And by having access to our ebooks online or by storing it on your computer, you have convenient answers with Adjustment Costs, Irreversibility, and Investment Patterns in African Manufacturing. To get started finding Adjustment Costs, Irreversibility, and Investment Patterns in African Manufacturing, you are right to find our website which has a comprehensive collection of manuals listed.
Our library is the biggest of these that have literally hundreds of thousands of different products represented.

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Adjustment Costs, Irreversibility, and Investment Patterns in African Manufacturing

Adjustment Costs, Irreversibility, and Investment Patterns in African Manufacturing

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