Factor adjustment costs: a structural investigation

Haroon Mumtaz and Francesco Zanetti

No 467, Bank of England working papers from Bank of England

Abstract: This paper assesses various capital and labour adjustment costs functions estimating a general equilibrium framework with Bayesian methods using US aggregate data. The estimation reveals that the adjustment costs are convex in both capital and labour and allowing for their joint interaction is important. The structural model enables us to identify the response of factor adjustment costs to exogenous disturbances, and to establish that shocks to technology and the job separation rate are key drivers of adjustment costs. However, the analysis shows that factor adjustment costs are unable to explain large fluctuations in the firm’s market value in the data.

Pages: 37 pages
Date: 2012-10-26
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.bankofengland.co.uk/-/media/boe/files/ ... al-investigation.pdf Full text (application/pdf)

Related works:
Journal Article: Factor adjustment costs: A structural investigation (2015)
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:boe:boeewp:0467

Access Statistics for this paper

More papers in Bank of England working papers from Bank of England Bank of England, Threadneedle Street, London, EC2R 8AH. Contact information at EDIRC.
Bibliographic data for series maintained by Digital Media Team ().