Investment and firm dynamics

Pablo N. D'Erasmo ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper I ask whether a model of ¯rm capital accumulation with entry and exit calibrated to match the investment regularities of U.S. establishments is capable of generating the dependence of ¯rm dynamics on size and age. Firms face uncertainty in the form of idiosyncratic productivity shocks and are subject to non-convex capital adjustment costs. I solve for the stationary equilibrium to show that the model can account for the simultaneous dependence of industry dynamics on size (once we condition on age) and on age (once we condition on size).

Keywords: firm dynamics; investment; financial constraints (search for similar items in EconPapers)
JEL-codes: D21 G11 E22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge, nep-ent, nep-mac and nep-tid
Date: 2006-03-01, Revised 2007-07-12
View list of references

Downloads: (external link)
http://mpra.ub.uni-muenchen.de/3598/ orginal version
http://mpra.ub.uni-muenchen.de/4032/ revised version

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:3598

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany
Address: Schackstr. 4, D-80539 Munich, Germany
Contact information at EDIRC.
Series data maintained by Ekkehart Schlicht ().