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Author/Editor:
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Koeva Brooks, Petya
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Publication Date:
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January 01, 2001
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Electronic Access:
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Free Full text
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper incorporates time-to-build into the standard investment model with convex adjustment costs. The empirical Euler equation is estimated using a U.S. firm-level panel from Compustat. In spite of the introduction of time-to-build, the magnitude of the implied adjustment costs is unrealistically high. Exploiting another approach, I test directly the restrictions imposed by time-to-build on the investment equation. The results indicate that these restrictions cannot be rejected for five of the sixteen industries in the sample. Finally I show that time-to-build can explain approximately one-third of the variation in persistence of structure investment across four-digit industries.
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Series:
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Working Paper No. 01/9
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Subject(s):
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Investment | Economic models | United States
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Author's Keyword(s):
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Time-to-build | investment |
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English
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Publication Date:
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January 01, 2001
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ISBN/ISSN:
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1934-7073
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Format:
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Paper
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Stock No:
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WPIEA0092001
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Pages:
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22
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Price:
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US$15.00 )
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Price Delivery Note:
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Prepayment required for individual copies. An annual subscription is $375.00 a year. It includes 12 monthly shipments and priority mail delivery. The Stock No. for the subscription is WPEA.
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