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: University of Brescia
No 2003.35, Working Papers from Fondazione Eni Enrico Mattei
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 strongly 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 capital and consider separately purchases and sales of assets. We disaggregate 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)
JEL-codes: C33 C34 D24 G31 (search for similar items in EconPapers)
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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 (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2003.35
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