Estimating empirical marginal adjustment cost function: a power series approach

Muhammad Nazmul Khan ()
Additional contact information
Muhammad Nazmul Khan: New York University

Empirical Economics, 2022, vol. 63, issue 6, No 14, 3185-3210

Abstract: Abstract Using insights obtained from Newey’s (1994) series estimator and a novel restatement of the q-theory that additively separates the marginal adjustment cost term in the canonical model, I model and estimate the shape of the marginal adjustment cost function. I discuss the issues in specification and identification in details, focusing particularly on the misspecification due to the q-ratio being an insufficient statistic for determining investment. The function recovered from the Indian 2014 WBES data can explain both lumpy and serially correlated investment.

Keywords: Cross-sectional model; Firm behavior; Adjustment cost; Polynomial regression (search for similar items in EconPapers)
JEL-codes: C21 D21 E22 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00181-022-02232-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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: https://EconPapers.repec.org/RePEc:spr:empeco:v:63:y:2022:i:6:d:10.1007_s00181-022-02232-6

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-022-02232-6

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().