EconPapers    
Economics at your fingertips  
 

Lumpy investments and capital adjustment patterns in the food manufacturing industry

Pinar Geylani

Journal of Economics and Finance, 2015, vol. 39, issue 3, 517 pages

Abstract: This paper investigates investment patterns and the types of capital adjustment cost in the U.S. food manufacturing plants. The study first documents the lumpy nature of investment rates and shows that few investment incidents at plant-level contribute to a large portion of aggregate investment, indicating the importance of large investments in the food manufacturing industry. Further, the paper presents econometric evidence for the nature of capital adjustment costs by estimating an investment hazard model which determines both the probability of having an investment spike and the factors affecting lumpy investments. The results support the presence of both convex and non-convex components of capital adjustment costs. While the importance of lumpy investments at the plant-level support for a non-convex component of adjustment cost, the empirical estimation of hazard function shows downward-sloping shape (i.e., negative duration dependence) which demonstrates the existence of a convex component as well. Copyright Springer Science+Business Media New York 2015

Keywords: Convex and non-convex adjustment costs; Lumpy investments; Plant-level data; D21; D24; E22; 033; L66 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s12197-013-9262-2 (text/html)
Access to full text is restricted to subscribers.

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:jecfin:v:39:y:2015:i:3:p:501-517

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-013-9262-2

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2022-05-13
Handle: RePEc:spr:jecfin:v:39:y:2015:i:3:p:501-517