Non-convexities in the adjustment of different capital inputs: a firm-level investigation
Alessandra Del Boca (),
Marzio Galeotti () and
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Paola Rota: Department of Economics, University of Brescia
No 203, Working Papers (-2012) from University of Bergamo, Department of Economics
Recent developments in investment research have highlighted the importance of non-convexities and irreversibilities in the firms’ adjustment of quasi-fixed inputs. However, aggregation across capital goods may smooth out the discontinuities associated with the adjustment of individual assets. The lack of suitable data, is one of the reasons why empirical work has stronlgy relied on the assumption of capital homogeneity. In this paper we exploit a new data set of 1539 Italian firms which allows us to disaggregate across several capital types and consider separately purchases and sales of assets. We start from the basic disaggregation between equipment and structures and construct measures of fundamental Q to capture investment opportunities associated with each asset. To uncover the pattern of dynamic adjustment we use non-parametric techniques to relate each individual investment to own fundamental Q.
Keywords: Investment; Heterogenous Capital; Non-convexities; Fundamental Q; Panel Data. (search for similar items in EconPapers)
Pages: 44 pages
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Journal Article: Non-convexities in the adjustment of different capital inputs: A firm-level investigation (2008)
Working Paper: Non-convexities in the Adjustment of Different Capital Inputs: A Firm-level Investigation (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:brg:wpaper:0203
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