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Taxation, Investment, and Firm Growth with Heterogeneous Capital

Jason Cummins () and M. Dey

Working Papers from C.V. Starr Center for Applied Economics, New York University

Abstract: Capital heterogeneity has largely been ignored in studies of investemtn behaviour. We estimate a dynamic structural model in which different types of capital are interrelated in both the production and adjustment cost technologies. Our result help explain some of the empirical failings of the neoclassical model. We show that when capital heterogeneity is ignored estimates of the adjustment costs are biased upward, and estimates of factor substitution in production are biased downward.

Keywords: PRODUCTION; INVESTMENTS; CAPITAL GOODS (search for similar items in EconPapers)
JEL-codes: D24 E22 E23 (search for similar items in EconPapers)
Pages: 37 pages
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:cvs:starer:98-07

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