Fixed Capital Adjustment: Is Latin America Different? Evidence from the Colombian and Mexican Manufacturing Sectors
IMF Working Papers, April 1, 1999
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- Fixed Capital Adjustment: Is Latin America Different? Evidence from the Colombian and Mexican Manufacturing Sectors
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Bibliographic details
- Authors: Alberto Isgut
- Published: April 1, 1999
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451847925.001
Overview and Objective
- Examines capital adjustment patterns using two large and largely novel data sets from the manufacturing sectors of Colombia and Mexico.
- Compares investment patterns in these countries to those reported for the United States.
Key Findings
- Investment patterns in Colombia and Mexico resemble those reported for the United States "to a surprising extent."
- Capital adjustments beyond maintenance investment occur only rarely.
- Large spikes account for a significant fraction of total investment.
- Duration models do not provide strong evidence for the presence of substantial fixed costs.
- Nonparametric adjustment function estimates reveal the presence of irreversibilities in investment.
- These irreversibilities are important for understanding aggregate investment behavior.
Methodology and Technical Terms
- Data: Two large and largely novel manufacturing-sector datasets from Colombia and Mexico.
- Analytical approaches mentioned:
- Duration models
- Nonparametric adjustment function estimates
- Logit models (listed among subjects/keywords)
- Relevant technical terms and concepts preserved exactly as used in the source:
- capital stock
- equipment investment
- hazard function
- investment episode
- investment rate
- investment spike
- irreversibilities
- lumpiness
- nonconvexities
- panel data
- Producer price indexes
- Productivity
- Stocks